Cash Loans: The Good, the Bad, and the Debt-Free
Happiness is what they're selling. Relief from the crushing weight of that gigantic rock we're all forced to carry called 'financial burden.' It's heavy and cumbersome, and the very thought of unloading it for a short time is so tempting, that some of us find it easy to throw caution to the wind and apply for the quick cash loans these small payday advance lenders offer.
Why not? The cops towed your car off, and you need eighty bucks to pay off the ticket. You can't work without your car. You don't have the money to get your car. You don't get paid until next week. A cash advance seems like the logical solution. They don't even look at your credit history. They just want to see a paycheck stub and a bank account. How easy is that? Then there's that thing you've been wanting to buy...it's only a few bucks more, so you may as well make it a hundred instead of eighty dollars. Oh, and your kid has been begging for that game. Another twenty won't make a difference.
The excuses for more will keep adding up, and here's this company ready and waiting to hand you a wad of cash. Cold hard cash. The kind that's easy to spend, because it's in your pocket (burning a hole) instead of in the bank (waiting for bills).
Why not? Because if you don't have the money you need saved in the bank, it shows you have a hard time controlling your spending habits, and you're probably going to have a hard time paying off cash loans. This means a new set of weekly fees that you hadn't planned. Before you're through, you'll end up spending much more than you borrowed just in interest and late fees. Stop the mad cycle of easy cash loans and payday advances. You might have no choice but to borrow, but following a few simple steps can help eliminate the painful after-math of a cash advance.
Only borrow as much cash as you need
This might be one of the hardest parts. When you're applying for a cash loan, and you know you'll be out of diapers before your paycheck comes, it's so tempting to add a few bucks of spending cash to the credit line.
Stop yourself right there. Ask yourself a few questions.
- Do I need this money right now?
- Will I spend the money immediately on something that is necessary?
- Can I do without the money by conserving my resources?
- Will I actually use the money on this excuse, or will I end up blowing it on something frivolous?
Can you wait for the extra money? You probably can. It's nice to have everything you want without waiting for it, but it will save you a lot of money if you just hold off until payday.
Will you spend this money immediately? If you want to advance an extra thirty bucks so you'll have enough to for gas on Friday, you should reconsider. If you know for certain that you'll need it, fill your tank on the way home. Don't carry the extra cash in your pocket, because you're likely to spend it on something else.
Can you find another way to get by? Most of us are surprised by what we can accomplish when we're strapped for cash. Use only half the soap for laundry loads. Buy the cheap hotdogs for supper tomorrow, and reheat last night's meal for tonight. But don't use credit.
Are you really going to spend the money on what you think you're borrowing it for? Cash is hard to hold on to. You know your habits. If you've blown the grocery money at a restaurant before, then don't borrow it.
Don't let the late penalties kill you
You've followed good sense and only borrowed what you needed. You skimped by on as little as possible, and now your pantry and gas tank are empty. You want to stop at the bank, cash your check, and buy a few things before going to the loan company to take care of your advance.
Here's where you'll make your biggest mistake. When you have your paycheck, go straight out and pay off that loan...all of it. The groceries can wait. The movie rentals can wait. Your only concern should be to get out of debt. Most loan companies can cash your check for you. This will make it easier to do all at once. Don't spend a single penny until your debts are satisfied. If you delay your payment, or only pay it partially, you'll start that ugly cycle again, and who knows when it will end, or how much extra you'll spend. Sell all your toys and eat macaroni and cheese for the next two weeks, but settle that loan.
Now it's time for discipline
You borrowed only what you needed. You paid all your cash loans in full the very day your paycheck came. Now you're debt free and living easy on payday. You even have a few extra bucks in your pocket. Maybe you can afford to buy the gourmet coffee. Just one cup to celebrate. Oh, and a doughnut to go with it. Wrong.
Now comes the real work. Now it's time to roll up your sleeves and keep this from ever happening again. You need to restructure your spending habits. You need to stop thinking of those extra dollars as spending cash, and start thinking of them as your safety net. Put the money away. Put it in a different account. Not a checking account, but a savings account. One that you need to actually go to the bank in order to withdraw, because the situation will rise again. You'll have another emergency, and you'll need cash. Your car will get towed again, your water heater will stop working, or you'll get a tooth ache and have to go to the dentist who only accepts payment at the time of service.
Here are a few tips to avoid frivolous spending.
Cash loans are convenient, and sometimes necessary, but they are not ideal. They are for emergencies, but with some careful planning and healthy spending habits, you can avoid the need for them altogether.