Things You'll Need:
- Bank account
- Job
- 401(k) account (optional)
- Budget
- Shopping list
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Step 1
Do your homework before going to a payday lender. Payday lending works in a couple of different ways. One way is that the lender drafts the loan directly from your bank account on the due date. If you extend the loan, the lender will then draft the extension fees from your bank account on the due date. The second way is that you write the lender a check for the amount that you are borrowing, then the lender deposits the check in the bank on your payday. Either way, make sure that you have money in the bank on the day that the payment is scheduled to clear. If the check or the payment bounces, you will be in a huge mess with bounced check fees, bank fees and fees charged to you by the payday lender.
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Step 2
Pay the loan off as quickly as possible. Some lenders will offer you the option of extending the loan. When this happens, you basically pay the finance fees, with no money going towards the principal loan amount. So in the end, the money you give the lender for an extension is gone. It is not applied towards the loan, so it's like giving money away. If you have arranged a payment plan with the lender, pay as much as you can as often as you can, even if it's before the loan due date.
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Step 3
Assess your financial situation. How did you end up getting a payday loan in the first place? Was it a one-time emergency situation, or was it the fact that you are having financial difficulties and often need extra money to pay some bills? If it was a one-time situation, that's slightly easier to deal with than if it is because of financial difficulties. If the reason is the latter, then sit down and make up a budget. Figure out how much money is coming in and how much money is going out. How much is spent on bills? Entertainment? Groceries? After all the necessities are paid, how much is left over?
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Step 4
Cut unnecessary spending. Downgrade your cable or telephone bill, and don't eat out as frequently. Take your lunch to work. Ride the bus to cut down on gasoline costs. When you shop, make a list and stick to it rather than impulse buy once you get to the store. All of these are ways that you can trim your expenses and free up a little extra money. Put a little bit of money away in a savings account every payday. Even if it's only $20 a month, it will add up over time and you'll have a little buffer when times get tough.
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Step 5
Avoid taking out any other loans through payday lenders once the loan is paid off. If you find yourself in a pinch, check with your employer and see if you can get a payday advance. This works in the same way that a payday loan does, but instead of having to write a check and pay loan fees, your employer will deduct from your next paycheck the amount you borrowed. In addition to payday advances, some employers will also extend loans to their employees that are paid back via a payment plan. The payments are automatically deducted from your paycheck and there are usually no fees for getting these types of loans. If you have a 401(k) plan set up through your employer, see if you can borrow against it. The fees charged for this type of loan are generally minimal and the payments are small, as well. In addition, you can sometimes choose to pay it back within a 1-year or a 2-year period. The best part about this type of loan is that the money you are borrowing is yours. You are just borrowing against your 401(k) balance. If you don't have any of these options, you might try borrowing money from family or friends.
Comments
chuckachuck said
on 8/10/2009 I came across this link a few days ago, it's not my website or product, I haven't even purchased the book myself. I personally have never had to take out a payday loan but, I know of many people who are stuck in these loans and it is like a nightmare. When I saw this I remember saying there will be a lot of people who would desperately need this info. Sorry if this may be inappropriate but it is right on target to helping people with their payday loans situation: www.paydaycrusher.com
shantel8 said
on 7/31/2009 I actually used a company that specializes in payday loan consolidation to get out of my payday loans. they saved me over $900 off of what I owed to payday loans. I would recommend them to anyone. http://www.reliefllc.com was the site. thank the Lord for those people. They stopped the crazy phone calls I was getting from collectors, saved me all that money and i got 9 months to pay all those loans back instead of everything being due in 2 weeks. I paid rollover fees on my payday loans for over a year before RELIEF, LLC helped me out. I paid them payday loan companies thousands of dollars more than i borrowed. so take my advice and contact Relief, LLC.