Don’t get stuck in the dreaded payday debt cycle – here are some tips on managing payday loans.
In the fall of last year, Canadians did some increased borrowing, mostly for mortgages. There was also an increase in people borrowing more than they were taking in. In other words, debt rose more than income overall.
But on the other side, in 2018 as a whole, overall household borrowing dropped almost 20 percent, which is the lowest since 2014. This is great news.
And we want you to be taking in more than you’re borrowing and owing in payday loans, credit cards, mortgages, and any debt.
To help, we’re focusing specifically on payday loans and giving you 10 tips on how to manage them. Keep reading for these easy how to’s and then get started getting rid of that debt so you can breathe again.
1. Look at the Big Picture and Consolidate
Focusing on even the best payday loans alone or skyrocketing credit card payments can make paying off debt seem like an insurmountable hurdle.
Instead, sit down and make a list of all your debt so you can get real about it and it’s on paper. This way, each piece of debt is a fact rather than an inflating balloon about to pop.
Next, find a way to consolidate if possible with the lowest interest rate possible. There are payday loan alternatives you can find if you look around at different types of lenders.
2. Get a Better Payment Plan
If you’re stuck with debt that’s putting the pressure on, ask for a better or extended payment plan (EPP). You’ll make smaller payments over an extended amount of time.
Payday loan lenders will often do this. Negotiate by the last day of business before your payment is due. Make sure you get a new agreement and read it carefully.
Also, make yourself a plan and schedule of you paying off your loans.
3. Pay Off the Highest Interest Debt First
If you have multiple loans and can’t consolidate, pay off the debt with the highest interest first. Payday loans are likely to be the ones to pay off first.
This one seems like a no-brainer, but we’re just reminding you that it’s okay to put any extra fund you have into paying off those loans first.
4. Don’t Get Into More Debt
Now that you’ve either consolidated your debt or you have a debt payment schedule and plan in place, do not accrue more debt. Just don’t.
And let yourself relish in the accomplishment each time you make a payment on what you owe and you see that principle go down.
5. Lower Your Spending
Find a way to cut costs and monthly expenses. Maybe cut out some of that huge cable TV list of channels and networks you get. Maybe skip some expensive extras at the grocery store.
Again, remember, once you pay off your debt, you can go back to some of your favorite luxuries. But then you’ll do it within a budget that comes in on the positive side of the balance sheet.
6. Make a Realistic Budget
Speaking of budgets, it’s important that you actually make one and stick to it. Be realistic. And don’t worry if you don’t have expensive software.
Put outgoing expenses on one side and incoming funds on the other. Adjust until the incoming money is the same or greater than the outgoing payments and expenditures.
Go ahead and make the budget for a few months. You can adjust it and continue to use it until you pay off your debt.
Ideally, then, you’ll be so happy that your budget worked that you’ll keep using a one so you stay in the green rather than the red.
Stick to your budget strictly until you pay off all loans.
7. Skip Little Extravagances Until You’re Debt Free
This is just like decreasing your expenses but it’s more specific. By that we mean to make a list of some expenses you can live without or that you can do more inexpensively. Then don’t do them until your loans are paid off.
Some things seem like they’re not that big of a deal but they add up.
Get Creative with Your List
Here are a few examples of things you can cut out if needed to make that budget.
Eat at home rather than eating out. Restaurant food almost always costs more than when you make your food at home.
Go to the do-it-yourself car wash rather than the more expensive drive-through car wash. Or just wash it at home in your driveway the old fashioned way.
When you invite people over, ask everyone to bring something. This way, you don’t have to buy all the food and drink but still host and have a social life.
If you like to go out and meet friends for drinks or coffee, invite them over to your place instead. You’ll save a significant amount even if you buy the coffee.
Speaking of coffee, make yours at home in the morning instead of buying coffee every day.
8. Boost Your Income
This doesn’t haven’t to be permanent, but the extra effort you put in to make a little extra money on the side to pay your debt will feel great and work.
Well, if you can find a way to make more money in a way that also makes you happy, great. Otherwise, get creative with an extra income source or two until you pay off the debt.
Think about babysitting. Think about pet sitting, feeding, or walking. Think about getting a small part-time job. There are plenty of remote jobs out there these days that are flexible.
9. Downsize and Clear Out the Closet
If you have an expensive or extravagant car, sell it and get something more affordable. If you have a storage space, downsize it or get rid of it entirely by selling your stuff.
That’s the key with this tip. Clean out your closet, garage, or storage unit and sell the things you don’t use and could earn you some extra cash to pay down that loan.
Sell clothes and shoes you don’t wear but that are in good condition to a consignment store or vintage shop, for example. Sell tools you don’t use or extra bicycles or other sports equipment.
Have a garage sale or sell online.
10. Commit to Yourself to Pay Off the Loan ASAP
Put paying off your debt at the top of your list. Make it a priority for yourself.
When we put our minds to something, we are more likely to do it.
Be Done With Payday Loans
Now that you’re armed with 10 great steps you can take to manage payday loans, get on the road to a debt-free you. Start by consolidating and then do any and/or all of the tips to switch from higher debt to higher income to pay down that debt.
We really want you to breathe and sigh with relief as soon as possible!
Continue reading our blog for more financial tips.
I’m a single mother of 2 living in Utah writing about startups, business, marketing, entrepreneurship, and health. I also write for Inc, Score, Manta, and Newsblaze