Payday loans have proven to be beneficial for those who are short on cash and have an unexpected bill to pay, don’t have enough funds to cover the month’s expenses or have too much debt from the holiday season. Experts do warn that payday loans come with tremendous risk because of high interest charges and fees.
To avoid getting caught in the debt trap that could come with a payday loan, it’s crucial to follow the terms of the agreement and pay back the funds as quickly as possible otherwise you could be paying astronomical interest and be more indebted than you were before.
For those who are incapable of handling their financial matters responsibly, here are five important methods to pay back your payday loans on time or as timely as possible without having to renew your loan or use the services of another payday lender.
Establish a budget
As soon as you have the money in your hand, create a two- to four-week budget. The budget should include how much you now owe, how much is going to the bills and how much you will be earning in the next few weeks. This way, you’ll be keeping track of where the payday loan funds are going instead of using your mind and losing track.
If you have never practiced fiscal responsibility and financial prudence before in your lifetime then be prepared to start now. During the time of your loan, it’s important to eliminate all kinds of spending, such as eating out, going to the movie theater or purchasing clothes. It might be difficult at first, but it’s better than owing a large sum of money to creditors and lenders for a long period of time.
Paying rent, making car payments, buying groceries and owing a sum of money to a payday lender can be overwhelming. In that case, consider obtaining a part-time or seasonal job or even a freelance opportunity to garner additional funds. This way, you can avoid extra costs and perhaps even have some money left over at the end of the month to set aside for a rainy day.
Payday loan debt first
Since payday loans come with the highest interest rate of all your bills, be sure to pay the payday loan first before all other debts. After that, pay off the remaining debts with the utmost importance and interest levels. Even if you miss a credit card payment or only pay the minimum balance, it’s better than forking over an extra $200 on a $200 loan.