Payday loan debt is a symptom of poor financial management. Consider a debt consolidation loan to get rid of them permanently.
The Myth of Payday Loan Help
Payday loans are touted as emergency help for those who run out of money before the next payday. The concept is that once an individual receives his/her paycheck, he/she will march right on down to the payday loan office and pay off the loan. Unfortunately, in paying off the loan, the debtor now doe not have enough money to make it until the next payday, and so another loan is taken out. Even worse, a debtor decides not to make the loan payment in full, and payments at huge interest rates are then set up. Once someone begins the payday loan cycle, it is terribly difficult to break the pattern, and the cost of the loaned money is exorbitant. Often, a debt consolidation loan is warranted.
Help From a Debt Consolidation Loan
Debt consolidation loans can be used to relieve a debtor of backed up payday loans, and are a good option when there appears to be no other way out of the cycle. Basically, a debt consolidation loan will roll all of the payday loans into one loan, hopefully at a lower interest rate and with a payment lower than that being made to the payday loan company. This type of loan will allow the debtor to again live within his/her budget, getting this consolidation debt paid off in a reasonable manner.
The Additional Caveat
A debt consolidation loan should not be considered a temporary fix to a recurrent problem of not living within one’s budget. Once a debt consolidation professional steps in to assist with securing the loan, there should be additional assistance so that the debtor does not repeat the same pattern of borrowing to make ends meet until paydays come. All too often, unless the behavior is changed, the individual will find himself in the same situation as before. The following steps should be taken with the help of a good professional:
- Establish a budget within which you can live. This may mean that you do without luxuries for a while; however, it is absolutely essential to develop the habits of living within the confines of one’s income.
- After paying bills and purchasing the necessities, determine how much money is left. Vow to stretch this money over the next days until the next paycheck. This may mean that lunch is taken to work instead of purchased; this may mean that pizza is not ordered in; this may mean that movies are rented rather than viewed at the theater. Whatever the unnecessary expenditures, vow to avoid them until you have financial stability.
- Once the debt consolidation loan is paid off, it is important to begin a regular savings plan. No matter how little, the habit of putting something into savings from each paycheck is critical. Having a savings account will allow one to use it for emergencies rather than making that dangerous trip to the payday loan store.