Important Tips for Debt Consolidation With Payday Loans
Before considering debt consolidation with payday loans, think about how you got into debt in the first place. Changing your expenditures can help keep from going back into debt. Payday loans are meant to be a last resort. They’re meant to get you through an emergency when you’ve run out of other options. Using them for debt consolidation is not going to help unless you are completely certain you can pay them back on the due date. Don’t take out a payday loan for debt consolidation before considering these two important tips.
Take a Hard Look at Your Finances
Too often people overextend themselves and run into money problems. A payday loan won’t help you until you have control of your income and expenditures. Take a look at your net income, not the gross! Gross income is the income you’ve earned before taxes, health insurance, and other deductions are removed. You want to know exactly how much you are bringing home each month. If you’re paid weekly, multiply the amount on your paycheck by 52 and then divided by 12 to get your monthly net income.
Take this monthly net income and subtract your bills. Include everything: medical bills, car loans, mortgage/rent, house and car insurance, utilities, groceries, etc. What do you have left over? What are you paying for that you can live without? Do you have cable television? Consider cancelling it and subscribing to much cheaper services like Netflix or Hulu. Use coupons when grocery shopping or stop buying unnecessary items like candy bars, beer, and cigarettes. How much will those changes save you?
Exhaust Other Options First
Interest rates for payday loans are very high, but they are high for a reason. Payday loan lenders take a risk when they loan you money. If you don’t pay, they can’t foreclose on your home. They can only send your account to collections and hope that you’ll pay up.
Before you sign up for debt consolidation with a payday loan, consider your alternatives. Talk to your employer about cashing in vacation days or seeing if they offer any employee loan products. Go to your bank or credit union to see if you qualify for a personal loan. Talk to your pastor, friends, or family members to see if they can help of offer another suggestion. You may find it best to sell your home, if you own a home, and downsize to something smaller. This can help you save money on heating and maintenance costs.
Debt consolidation with payday loans is not a decision to make in a rush. Be sure you understand exactly what you will have to pay on the loan due date and make sure you have the money to pay the loan in full.