The main reason that people are forced to turn to payday loans is that they are unprepared. Emergencies happen, that is just life. You need to prepare for life’s emergencies so that you can handle them. Here are some ways that you can get prepared for financial issues and have a better new year.
Start An Emergency Savings Account
This is number one on the list for many reasons. Even if your savings is only a couple hundred dollars, it can help. Saving is very important, not only for emergencies, but also for financial health in general. Learn how to save and you can be prepared when life throws you a curve ball and you can start planning for an eventual retirement.
If you are starting from square one, you might be at a loss as to how to begin saving. If you are like most Americans, you are living paycheck to paycheck as it is and can’t fathom how to put any money away.
Your first step in saving is therefore adjusting your budget. Ideally, you should be saving 10 percent of your take home pay. Sounds like a lot, but that is how much you need to save if you eventually want to retire some day.
Take your take home pay and allot 10 percent to savings. Then take the leftover money and distribute it among your other bills. If there is not enough money to go around, you need to make some cuts. This might be easy or it might involve making some major changes like moving or switching to a cheaper vehicle.
Get An Emergency Credit Card
Credit card debt is not something that you want to carry, but in an emergency, 20 percent interest is far better than the 400 percent interest of a payday loan.
There are a lot of credit cards out there, even for those with less than perfect credit. Credit One, for example is a credit card company that specializes in credit for those with less than perfect credit. You will probably pay an annual fee and have a rather low credit limit but it may be worth it, especially if you need to rebuild a credit score.
If you find that you are unable to get qualified for a credit card, even a high risk one, you need to work on that credit score. Make it your goal in 2020 to get approved for a card.
First, you need to pull your credit report and see where you stand. Use a free service like Credit Sesame. You can use that to get your score and monitor it continually. Once you have your report, the first thing that you should do is dispute any negative information.
Next, you need to work on paying your bills on time. If you have had late pays, it can affect you for years but you can start seeing some improvements in a matter of months. So, start paying those bills on time.
Develop An Emergency Plan
When an emergency strikes, you need to have a plan of attack. What would happen if you were to be laid off today? Would you keep going like normal or would you make some budget changes to ride out the storm?
Know what bills you can cut and reduce so that you can jump into action right away. This might mean putting memberships on hold, cancelling services or cutting food and entertainment budgets to the bone. Also, know what companies will let you skip or reduce bills. Many credit card companies, for example, will allow you to make interest only payments. Also, some auto loan providers will let you skip a payment as long as you are current.
If you have come to depend on payday loans, make 2020 the year that you stop doing so. They are just far to costly with interest rates that far exceed 400 percent. So, make it a point to use all three tips above to put yourself in the best position to handle emergency financial matters when they occur, because they will happen.