In today's tight economy getting a bank loan is not always an option. The only quick cash out there seems to be in the form of a short term, high interest payday loan.If managed properly these loans can serve a purpose in a time of need, though often they lead to a cycle of fees if not paid in full quickly.
There are nightmare stories of people in payday loan debt for years, paying only 'renewal' or 'roll over' fees. Many still owing the same amount as the day they took out the loan. Pretty hard to swallow. The only way to avoid the payday loan debt trap is to plan and save. We can save in so many more areas of our lives than we consider. The following money saving tips will hopefully help save some money and avoid payday loan debt or get out of it quicker if it's too late.
Tips For Saving Money and Avoiding Payday Loan Debt
In General Plan your budget. List all sources of income and your regular expenses. Take a look to see what you can cut back on. Look for better deals (for example - shop around for auto insurance).
Bring your lunch instead of buying it everyday.
Pay yourself first. Each month, try to save at least 5% of your take home pay. Increase that percentage whenever possible. Set goals. You'll want to save more if you know exactly what you're saving for.
Avoid impulse buys. Think about whether you need something before you buy it. You'll be surprised how much you can save by being disciplined.
Your Credit Be aware of what's on your credit report. Order a credit report online, but make sure you do your research before you order. Some companies charge hidden fees, so make sure you read the fine print. Check your credit report for mistakes.
If you find an error on your credit report, let the credit bureau know. If you have a dispute, the credit bureaus will investigate the report. The bureaus will give their determination You may qualify for lower interest rates as your credit improves and your debt is reduced.
The average interest rate charged for unsecured sub-prime credit cards is 20.73% compared to an average rate for middle-market or prime cards of 14.22%. Reduce your ATM fees. Use your bank's ATM rather than another bank's.
The average cost of using another bank's ATM in 2005 was $2.50 (consumerreports.org/May 2004). Cash advances are costly. Avoid borrowing cash on your credit card if at all. Cash advances usually carry a higher interest rate than regular charges, and come with no grace period.
For Seniors Senior Citizen Discounts Take advantage of discounts offered by department stores, restaurants (e.g. early-bird specials) and theaters. Senior Citizen Real Estate Discounts If you are a senior citizen, you may be eligible for discounts offered by your local government for real estate taxes.
For Your Car Consider dropping auto collision and comprehensive coverage if the premiums cost more than 10% of the value of an old car. Raise your auto insurance deductible to lower your premiums. Raising your deductible from $200 to $ 1000 can reduce your auto premium by 40 % or more.
Just remember that if you are in an accident, you are responsible for the deductible. If you mechanically inclined, do routine maintenance on your car yourself. Car pool or use public transportation.
Around The House Reduce your Cable TV Expenses. Limit cable to one TV in your house. You can also reduce your charges by reducing or eliminating the number of premium channels. Avoid using Directory Assistance. Directory assistance can charge anywhere from 30 cents for local numbers to $2.00 for long-distance numbers. Use the internet instead...it's free.
Watch your cell phone use. Make sure you don't exceed the maximum number of included minutes in your plan. Consider purchasing a pre-paid plan so you control your cell phone budget. Make long-distance calls when rates are lower. Evenings and weekends generally offer the most advantageous rates.
Look for packages that include UNLIMITED long distance. Eliminate extra phone services that you don't need. Call waiting, call forwarding and speed dialing may be nice to have, but how often do you really use it? Or find packages that include it for free....or negotiate for it. Do routine maintenance around the house yourself instead of hiring someone to do it for you. Barter services with friends.
For Students Deduct student loan interest on your taxes. Since 2001, the federal government has allowed students to deduct interest up to $2500 on student loans for the entire life of the loan. For specific tax advice, you should speak with a professional tax advisor.
Look for ways to lower your education costs. You may save on your college tuition by taking evening, weekend or summer courses, or save on your living expenses by becoming a dorm supervisor.
At The Store Shop for generic brands. Your daily gourmet coffee and muffin may cost you over $1000 a year. Try limiting your visits to once a week as a reward or present to yourself. Put what you would have spent the other four days into a bank account. The money you save could go towards your bills, a vacation, or holiday shopping.
Make a grocery list and stick to it. Don't shop for groceries when you're hungry, you could over spend. If you are normally healthy, it might be worthwhile to raise your health insurance deductions.
Quit smoking. The recent increases in cigarette prices make this an even better idea. Aside from the obvious health benefits of quitting, if you smoke a pack a day, you could save almost $3000 a year!
Shop at Farmers' Markets or U-Pick farms. Buy in bulk or larger sizes. Take advantage of weekly specials or foods in season. Eat in. The difference in cost between a week of eating out and a week of groceries will send you running to the supermarket.
For Your Entertainment Attend movie matinees and use coupons. Many theater chains offer matinee and early-bird discounts.
Rent movies or video games. Try your local library for favorite titles. Make sure you return them on time to avoid late fees. Borrow books from the library instead of buying them.
Shop during the right season. You can usually find good buys when new models are introduced and retailers must get rid of older merchandise. For example, portable audio products, microwave ovens, and air conditioners often go on sale in spring and washer and dryers go on sale in September.
Make a vacation budget. If you're going away, plan how much you want to spend and stick to it. Save the money before you go and do not charge your vacation expenses.
Have a date? Go on a picnic. Go on a hike or stroll through the park. It's much easier on your pocket book than dinner and a movie, and it can be just as entertaining. Surf the Internet for free local events. Citysearch.com is an excellent resource for free events happening in cities across the country.
If you have payday loan debt already and can barely afford your necessary expenses, there are payday loan consolidation programs available. Make sure you do research and go with a company that you are comfortable with and has a track record of success. If you're more ambitious there are step by step programs available online that teach you how to settle payday loans.