Paying off payday loan debt

Eliminating Payday Loan Debt

Payday loans can be a useful tool at times but it is all too easy to get in trouble with them. If you are in trouble and are having a hard time finding your way out, here are some ways to get that debt under control. Let’s finally get those payday loans paid off and never use them again.

Payday Loan Debt

If you are struggling to pay off your payday loan or loans, you are not alone. It is far too easy to get in trouble with them. An emergency comes up and you take out a bad credit loan to pay for it, only to find that you do not have enough money to pay it back when it comes due. How are you supposed to pay off a loan when you make just enough money to get by in the first place? Well, there is hope, so hang in there.

Step One: Get A Positive Attitude

You have got to believe that you will get these loans paid off. Don’t be down on yourself, you are not the first person to run into payday loan trouble and you will certainly not be the last. There is a way out but you are probably going to have to make some sacrifices, big ones. Don’t worry, you will come out of the tunnel a stronger person mentally and financially.

Step Two: Cut Your Budget

If you are already living paycheck to paycheck, you need to slash your budget to the bone until you get your loan paid off. There are a lot of ways to do this but you will have to make some sacrifices.

First, cut out all dining out. This means dinner, lunch, breakfast and even snacking. You should eat and drink nothing that you do not buy at the grocery store, the markup is too high.

As far as groceries go, you need to switch to the basics. Base your menu on cheap staples like rice, potatoes and dry beans. You can buy them in bulk and along with a few spices, can be used to make dozens of different meals. Best of all, when bought in bulk, they are pennies a serving. If you are not a big cook, now is the time to learn how, so look up some simple recipes on the internet. Just search for “recipe rice beans” or “recipe potatoes” and see what comes up.

A family of four can easily save several hundred dollars a month switching to a staple based diet and cutting out fast food. It might take some getting used to but these are the sacrifices you need to make. You might even start liking your diet more and you will surely lose weight and get healthier.

Next, cancel any non necessity service like cable, satellite, gym memberships, etc. Every dollar that you can save counts.

The point is to cut your budget down to the bone. If you can live without it, do so.

Step Three: Work With Your Lenders

You may think that your payday loan lenders are the devil and they might be, but you still need to work with them to get this resolved.

Ask about payment plans. Many lenders will take payments as a “best practice” mandated by loan organizations that they may be a part of. Many states also make it a requirement that a lender accept a payment plan.

You may also be able to negotiate a settlement with your lender. Tell them that you are considering filing bankruptcy because you can not afford to pay the entire amount of your debt. They may be willing to accept a settlement for half of the debt instead of risking losing it all.

If nothing else, you should make at least a partial payment on the principal every time the loan is renewed. Even if you still had to roll it over, you would pay less fees each and every time and eventually you would be able to get it completely paid off.

Step Four: Keep Going

Once you get your payday loan paid off, it is not time to lay off the gas, keep going.

Take the money that you were spending on that payday loan and start an emergency savings account. This will ensure that you never have to go through this again.

Keep your emergency savings account at another bank away from your regular checking and do not link them. This keeps the money accessible but not immediately available.

Once you have an account established, you can start loosening up your budget a bit but don’t go crazy. A good budget is one that allows for saving. Ideally, you want to save 20 percent of your take home pay but make sure that you are at least putting something away, even if it is just $50 a month.

Step Five: Get Your Credit In Shape

Lastly, you need to get that credit in shape. Improve that score and you may be able to qualify for traditional financing in an emergency, instead of a loan for people with bad credit.

That budget you have established is going to help you do this by giving you enough money to make all of your bills on time. That is really the biggest part of your credit score, making those payments on time.

In addition, start using some of your monthly surplus to pay down your credit card debt. Your goal is to get it below 30 percent and once you do, you will see some incredible improvements to your credit score.

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James Car is a finance, loan and budget expert based in the United States. After attending Brookhaven college, he went on to become a successful entrepreneur. He now enjoys writing articles that help people save and make the most of their money.