Payday loans are quick and easy, but can quickly trap you in a cycle of borrowing. The Consumer Financial Protection Bureau found that 80% of payday loans were followed by another loan in less than 14 days. If you feel like you are drowning in debt from payday loans, use these tips below.
Cut Spending
Take a look at your budget and determine where you have unnecessary spending. If you have a gym membership that you never use, cancel it. If you are paying a lot on your cell phone or cable bill, find out how you can lower your bill (you may have to decrease the data you get each month or get rid of some of the channels you don’t watch) . Don’t go to the mall to buy new clothes or shoes, and start packing a lunch for work. Do whatever you can to cut back on spending, so that you can use that little bit extra to pay off your payday loan.
Stop The Cycle
If you find yourself needing to borrow money in the future, don’t take out another payday loan. See what needs to happen in order to take a small loan from a bank or credit union or anywhere else that offers a better rate. Even using your credit card is a better option than using a payday loan.
Sell Stuff
Look around your home and see if there is anything of value that you can sell to help pay off the loan. You can sell clothes, electronics, furniture, toys, appliances, etc. A good rule of thumb is that if you have not used something in a year, you probably won’t use it for the next year. Use sites such as eBay and Craigslist to sell things quickly and at a low cost to you.
Get Another Job
While it may not seem like fun, it may be a good idea to get a part-time job to help you pay off your loan. Or, if you work for an hourly rate, see if you can pick up a few extra hours at work.
Talk to a Financial Adviser
If you feel like you cannot balance your checkbook, get some help by talking to a credit counselor or financial advisor. They will review your financial obligations and help you come up with a plan to stop the cycle of borrowing. Many agencies only charge minimal fees, and others don’t charge fees at all.