No one wants to live from paycheck to paycheck, but it happens when we don’t plan ahead. Without well-stocked financial reserves, many of us are caught with nowhere to turn when unforeseen expenses crop up. Most people in this situation turn to credit cards or payday loans as a way of getting through the rough spots, but using high-interest credit also has its drawbacks. The interest you’ll pay on high-interest unsecured debt is extremely high. If you didn’t think you could make it before – without this extra cost – how will you make it over the next financial hurdle?

The answer, of course, is to plan ahead and live on a budget. These are not sexy, glamorous, or new strategies for getting ahead in life. You won’t see ads for budget planning on late-night TV infomercials. No hot celebrities will be touting the benefits of planning for the future. It’s not a get-rich-quick scheme. In fact, most people think budgeting is pretty boring.

If you use your imagination, though, you might think about how much safer you will feel with money in the bank, or how much you will be able to save on interest when you don’t have to turn to high-interest lenders for help in the lean times. If using your money wisely sounds like a big snooze, try thinking of it as avoiding the evil credit trap. Go ahead and put on your superhero costume. We won’t tell anyone.

If you’ve never set up a budget before, don’t worry. It’s not all that difficult. If you are the type who keeps receipts from every purchase, budgeting will be much easier. Take a look at your receipts, and categorize them according to the expense. Review how much you’ve been spending on groceries, gas, eating out, travel, and entertainment. Set reasonable spending limits for these categories, and list all of your regular expenses such as rent or mortgage, insurance, and bills.

When you add it all up, do your budget amounts come in higher or lower than your income? If you’ve been living within your means, your budget will not eat up your entire income. If you’ve been overspending, now is the time to think about how to trim unnecessary expenses out of your life.

Other important things to consider:

• How much are you putting into savings each paycheck? Most experts recommend paying yourself first. If you’re on automatic deposit, have a portion of your check sent straight to your savings account. You’ll never see it, and chances are, you won’t miss it.
• Don’t forget recurring expenses that happen less than once a month. Things like auto maintenance, birthday gifts, travel, and holiday spending should get their own budget category and regular deposits, just like your savings account.

If you are realistic when making a budget, it will be easier to stick to it. Before long, you’ll enjoy greater financial stability and you can proudly wear that superhero costume everywhere you go (although we don’t recommend it).

During these tough economic times, nearly everyone has been hard hit. Whether through job loss or reduced hours at work, many people have lost income and find themselves strapped for cash. With bills coming in at a steady pace, more and more people are turning to payday loans to keep up with the incessant tide of expenses.

While the ease and convenience of payday loans is hard to match, using them unwisely can lead to long-term debt and exorbitant costs. If you find yourself facing a financial emergency, it’s important to understand how you got here, and how you’re going to prepare in case of future emergencies.

Living Within Your Means

When you’re just starting out in life, getting your first job can be an exciting time. The money you make is something to be proud of, and you ought to use it to improve your situation. That doesn’t necessarily mean going out and buying a lot of fancy new furniture or big screen TVs, though. Making sure that you will have financial stability for now and in the future ought to be your top priority.

Living within your means often requires creating a budget. Working with a budget will help you plan for expenses that only crop up once in a while, like maintenance costs for your car and gifts for birthdays and holidays. Once you have established a budget, monitor your expenditures to see how you’re doing. If you routinely go over your budget in a particular area, adjust your budget or rein in your spending to adjust.

Saving for the Future

Although you may feel like you’re making enough money that you can afford to spend carelessly, you can’t predict how long your income will last. Be sure to protect yourself from future financial disasters by starting a nest egg early.

Accidents and medical problems can crop up unexpectedly, and insurance doesn’t always cover the costs, and they often don’t pay out in a timely fashion. Make sure you have enough money in savings to cover deductibles on car insurance, health insurance, and your renter’s or homeowner’s policy, then continue saving until you have at least two months of living expenses banked. If you should unexpectedly lose your job or suffer a medical emergency, you will have peace of mind knowing that you are prepared.

Using Payday Loans

Payday loans are wonderful tools for financial emergencies. They offer convenience and speed over traditional lenders, and can help you bail out of short-term problems. Just make sure you’re not using payday loans to deal with long-term economic issues. Stick to your budget and save for emergencies so you won’t be reliant on fast

The school year is almost here again. Parents everywhere, rejoice! Soon, your home will be blissfully free of children for seven or eight hours Monday through Friday. Soon, believe it or not, you’ll even start to miss the little buggers. If you’re like most of us, you’ll also be spending a mint on school supplies. From clothes to pencils, paper, and lunchboxes, you’ll be spending a hefty amount for junior to go back to school. And, even after you’ve spent all that money, chances are he’ll come home with several notes from teachers explaining why they need some particular item that you wouldn’t have even thought about buying. Broke already, you might even need to take out payday loans to finish your school shopping.

While there’s no avoiding the expenses which a new school year brings, there are ways to avoid taking out payday loans to finance it. After all, you don’t want to still be paying off your kids’ school supply bill when the next summer vacation rolls around.

• Start shopping early. Lots of stores run fantastic specials on school supplies, but they often start three to four weeks before the school year does. The old saying “The early bird catches the worm” was never more true than with school supply shopping. You can buy piles of spiral notebooks for ten to twenty cents while they are on sale, or wait and pay $1.50 or so each. The same kinds of bargains are out there for other school supplies as well.

• Take this opportunity to make your kids finally clean out those nasty bedrooms. There are probably school supplies from three years ago lurking under the bed just waiting to be discovered. Additionally, if they keep their rooms clear (yeah, right), they’ll be less likely to lose the supplies you buy them now, costing you less money as the year wears on.

• Don’t be afraid to buy some school clothes at rummage or garage sales. Designer clothes are expensive. Wearing used clothes won’t kill your kid, as long as you don’t make them wear used socks or underwear. One piece of advice, though: go into the next school district. While wearing garage sale clothes won’t kill anyone, an occasional teen has been known to die of embarrassment when another student at his or her school recognizes their shirt.

If you do need to take out a payday loan to cover some of the back to school expenses, take only what you need and get it paid off as soon as possible. Payday loans can be useful tools, but they can be a bitch to get off your back if you get into the cycle of re loaning.

Image by Avolore

If you’re on the lower end of the income spectrum, chances are you know what it means to have a need and not have the ability to pay for it. For many people, payday loans bridge that gap between when they need money and when they will have money. Used sparingly and paid off promptly, they can be a useful enough tool. The problem comes in when people borrow more than they can afford to repay, putting themselves into an endless cycle of reloaning.

Back in the day, many of us who grew up on the wrong side of the tracks watching our parents struggle to make ends meet had a wonderful opportunity to observe better ways of dealing with our financial situations. We’re not saying you should never take payday loans if you need them.  What we are saying is that there are other things you can do to cut some corners and save some of your cash so that you will have some when an emergency hits. Here are some of the things our parents did before payday loans were commonly available:

• Clip coupons. You can literally save thousands of dollars per year by going through the Sunday newspaper and your daily mail and clipping coupons. Two things you do need to look out for, though: Coupons are an advertisement designed to get you to buy a particular product. Sometimes you can get an off brand product cheaper without a coupon. Also, make sure that you’re not buying products you don’t need just because you have a coupon.

• Garage and Yard Sales. Your kids might not like wearing hand me downs, but if you buy them in a different neighborhood, no one else is going to know the difference. We grew up wearing fairly stylish clothes that my parents never could have afforded new because our mom had the sense to buy them at garage sales, saving hundreds of dollars every school year.

• Farmers Markets. Not only can you get a lot of your groceries much cheaper, but you’ll be buying fresh produce, which is much healthier than the canned or boxed foods most of us buy.

• Save. Here’s the thing. We know you don’t have much money left after you pay the bills. We also know you want to have at least a little bit of fun with it. But it’s no fun being stuck repaying cash advances for months at a time. So, instead of spending every extra penny that you have, save half of them. You’d be surprised how fast it adds up, and you can still use the other half to have a good time.

Despite the bad rap that they’ve received, payday loans can be a real life saver for those without access to other forms of credit. If you’ve ever been in the situation when you needed cash fast and couldn’t get a standard loan, you know exactly what I’m talking about. Unfortunately, because the industry has some rather rampant abuse issues, this is an option which may not be available much longer.

Payday loans are intended to accomplish one simple thing. They are there to tide you over until you get your check when you run into a genuine emergency. Here are some examples of good and bad reasons for taking out a payday loan:

• Taking out a small payday loan to buy groceries because your kids need to eat may be a good idea.

• Taking out a payday loan because you’re out of beer (or malt liquor, or wine, or your liquor of choice) is a very bad idea.

• Taking out a payday loan to pay for car repairs so you can continue to go to work may be a good idea (assuming public transportation isn’t available).

• Taking out a payday loan so you can get new rims or spinners is a bad idea.

You shouldn’t take out more of a payday loan than you can afford to pay back with your next paycheck without needing to immediately borrow all of the money back again. Too many people get into the trap of borrowing as much as they can, then finding themselves in a bind when they need to pay it back because there’s not enough paycheck left to cover the week’s expenses. They end up borrowing the money again, ending up in a vicious cycle known as reloaning which often keeps people tied up for months at a time, paying exorbitant amount of interest.

Because some people have gotten themselves in over their heads with reloaning, and because some unethical lenders encourage the practice, several states have enacted laws governing the industry. These laws range from forcing lenders to disclose the actual annual interest rates to giving borrowers more liberal repayment options to outright banning payday loans altogether. If you live in an area where payday loans are still legal, make sure you use them carefully.

Image by AMagill

Having all the information to get the payday loan to fit your needs can make the process easier. Having tips to make the right choice can give you the ability to choose the right loan and lender for your own specific needs for when you need a short term loan. Below are tips in finding legitimate companies, tips for first time lenders and repayment information to make sure that this is the best financial solution for you.

1. Business PR: Tips to get the best loan from an online company that specializes in instant money.
2. Traveling Tips And Destinations: Information about choosing the right payday lender and why it is important to pay them on time.
3. Finding the Right Company: Choosing a legitimate company is vital, and this offers tips to make sure you are choosing one.
4. Hot Crew 57: Tips for first time borrowers.
5. Ayzor: A list of ideas to payday loan alternatives.
6. Loans Mortgages Tips: Advice on paperless payday loans.
7. Financing And Business: A list of things to consider when you are looking for a payday loan.
8. Stock Markets Review: Tips that can make getting and repaying a payday loan easier.
9. Learn about Grants: Tips to save money when using internet lenders to get the best rates.
10. Finance Guide: Offers advice on finding the best payday loan when looking online.
11. Adhesives: Looks at why you should use one, and offers advice on the use and repayment of the loans.
12. Car Loan Calculator: You can use these three tips to make getting a payday loan easier.
13. Loans For Unemployed: Things that should be considered before you borrow.  Also offers tips on getting the best loan for your own needs.
14. Arcrease: Tips to be smart when applying and choosing to use a payday loan.
15. Financial Highway: Scams are common, and these tips on how to spot them can help you make a smart decision.
16. Lower Shopping: Tactics you can use to get the best loan online
17. Finance Information: Using these tips can help you make sure you do not get into the financial trap of payday lending.
18. Share Money Tips: There are risks involved, and this shows some of them to be aware of.
19. Where Is Environmental Sky: A personal look about an experience with payday loans.
20. Finance and Business Tips: A look at the positive aspects to borrowing money from a short term lender.
21. Web Hosting: Tips for bad credit consumers to choose these types of loans.
22. Platform Finance: Looks at ways to make the application process easier.
23. Culture and Law: Tips to make sure the process is secure since you will be giving out personal information.
24. Financial Ideas: Tips to save money on the fees when you get a payday loan.
25. How to Invest Today: Gives the information on the process which can help you save time and know what to do before you apply.
26. Cuhrep: Tips to find the best interest rates for the loans.
27. El Campeon: Tips to find the best lender, including tips on faxless applications.
28. Life Style And Business: Tips to get your cash from the advance in several hours.
29. Technology Reviews:  Tips on faxless loans; includes how to find one and how to get them in minutes.
30. The Best Information Update: Shows how simple it is to get a loan, and tips to make it easy on you.
31. Ermes Computers: Tips for first time borrowers and ways to make the process simpler.
32. Make Money Online:  Looks at the process of online borrowing with tips on making the loan application easier.
33. Payday Loan Search: This gives tips on what to do when you get too many loans and the interest gets too high.
34. Free Credit Score Tips: Answers the question of credit with payday loans.
35. Pay 1 Day: Tips to get a personal loan
36. My Finance Blog: Tips to find the best price for companies that offer the loans.
37. News And Information: Tips to get a loan online in minutes.
38. Choice Personal Loans:  Offers tips on applying for the loan.
39. Cash Advance:  Many of the common questions of getting a payday loan are answered.
40. Tips Everyday:  Shows why an online loan is the easiest way to get money.
41. Blogging Tips By Goyz: Explains the process of the loan and what you are able to do with it.
42. Pan Fantasy: Tips for the borrowers to use to make the loan application easier. Also looks art the repayment aspect and why it is important.

Image Credits: stopnlook

Most payday loan places are happy to lend you up to 60% of your average take home pay. In many states, you can take out two or even more payday loans (generally from different places). It doesn’t take an economics professor to figure out that borrowing more than 100% of your take home pay, when you have to pay it all back, with interest, on the day you get your check, is a very bad idea.

Of course, when you need to pay more than you’re bringing in, your only option is to pay off the interest and borrow the money again (called re loaning). The problem is, you end up paying 10%-14% interest every single week until it’s paid off. And, as long as you have more than one payday loan out there, it’s awfully tough to pay them off.

I don’t want to paint a doom and gloom scenario. The truth is that you can get out of the mess even if you’re up to your eyeballs. Here’s what you do:

• Ask about your state’s regulations on payday loans. Many states require lenders to give you the option of paying off your loan in increments. Of course, that will probably mean no more payday loans from that company, and they’re likely to be pissed at you. So what.

• If you can’t pay your loans down in increments, try taking out a slightly smaller loan every time you borrow. You’re generally better off reducing just one loan at a time, in an attempt to get rid of one loan completely before you start reducing the other ones. One small step at a time, you can get yourself out of the cash advance hole.

• After you pay your loans off, start putting at least half of the money you had been spending in interest into a long term savings account. You can tell yourself you don’t make enough money to save all day long, but the truth is that if you can afford to pay it every week in interest, you can afford to put it in the bank for yourself.

Once your payday loans are all paid off, you can take a deep breath and relax. Celebrate. Maybe even buy something nice. Just make sure it’s not so big that you need to take out an advance to get it.

Photo via greggoconnell

But in what just might be the ultimate exercise in stupidity, many payday loans places are now offering their small, short term, high interest loans to people who don’t have jobs. Maybe it’s because, in our present economic situation, the pool of employed people to lend to has just become too small to be profitable. But giving a payday loan to a guy on unemployment? Come on, that goes beyond kicking a guy while he’s down.

Unfortunately, the unemployed are among those most likely to have a sudden need for cash. And they’re certainly amongst the most likely people to lack on hand funds. But taking out payday loans when there’s no payday in sight only makes the problem bigger.

We know, unemployed people do get an unemployment check. In most places, the unemployed can collect benefits for up to two years as long as they’re making some effort to look for a job. But the system that governs that whole mess can be volatile. Congress votes (or fails to vote) and wham! Benefits are gone. For a guy who has an outstanding balance on a payday loan, that means making the choice of giving up most of the last check he’s going to see until the Republicans and Democrats get together and decide to pay him or reneging on the loan. Neither one presents a pretty picture.

Payday loans have their place. But that place is for those who have a regular paycheck coming in. If you’re in the situation where you can’t count on the next paycheck, don’t take out a payday loan. In the end, you’re only hurting yourself if you do.

We remember being in this exact situation. We needed money, but we were unemployed. A good friend gave us excellent advice. When asked, “What are we going to do if we don’t take out a payday loan?” he asked us in return, “What would you do if payday loans weren’t available? Whatever it is, do that.”

Photo via dee & tula monstah

A Penny Saved

The best way to make sure that you don’t need to ever take out payday loans is to follow another of Benjamin Franklin’s pieces of advice, “a penny saved is a penny earned.”

If you take out a payday loan, you’re probably going to take out the max that you can. Simply put, if you didn’t really need the max, you wouldn’t be taking out a loan. Then, you will be paying 10%-14% interest on it every pay period until you pay it off and don’t re loan.

So, figure out what you would be qualified for. Calculate 60% of your take home pay (the typical maximum payday loan) by multiplying you’re a typical paycheck by 0.6, then figure 10% of that (multiply by 0.1)  to figure out how much interest you would be paying every pay period with a cash advance.

For example, if you take home an average of $300 per week, 60% of that is $180. And 10% of $180 is $18.

Now, think ahead. If you can save that $18 every week (or whatever your amount comes to), it won’t be long before you have a whole paycheck in the bank. At any rate, it only takes ten paydays before you have saved as much as you would be able to borrow from a payday loans store.

Now, if you have an emergency, you can borrow from yourself. But, make sure that if you do, you repay yourself. This is what people used to do before payday loans came along with a quick solution that ends up getting us into more trouble than it gets us out of.

Build Your Credit

Benjamin Franklin didn’t say this. Our dad did. He wasn’t as eloquent as the great statesman, but he had good advice. Start using credit responsibly and sparingly when you don’t really need it, pay the payments on time, and if you do hit a real need that takes more money than you can afford, you can take a much cheaper personal loan instead of a payday loan.

Photo via anolobb

But just like the person who is forced to defend himself, sometimes life backs you into a corner that you have no way to get out of without immediate help. That’s where payday loans come in. When you need money now to cover a real need that can’t wait until you get your check, taking out payday loans can help you get out of a tight spot.

Here are some examples of real needs that merit taking out payday loans:

• Your car breaks down and you need a couple hundred bucks for the mechanic to fix it. Without the car, you can’t get to work and stand to lose more money than you would if you took out the loan.

• Your rent is due (or overdue) and you stand to lose your home. Some landlords charge more for late fees than you will pay by taking out a payday loan and paying it back with interest.

• A death in the family or other serious emergency requires you to travel, and you need to go now. If you don’t have the money, a payday loan may be a viable option.

Here are some very poor reasons to take out payday loans:

• You want to buy something. It’ll wait until payday. If it doesn’t, you didn’t need it very badly.

• You want to go on a date. I know she’s probably fine, but if she can’t hold off a week or two, you don’t want her. Trust us on this one. Someone that impatient will cause you more trouble than she’s worth.

• You want to go on a trip. If you’re broke before you take a trip, imagine how broke you’ll be when you get back. The only difference is that now you have to give up 60%-80%, plus interest. Bad idea every time.

Here’s the short version of the long story: If you need it and can pay it back, go ahead and take a payday loan. But make sure that you really need it because taking out money that you don’t need will come back to bitch slap you every time.

Photo via Mark Cartwright