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).

With so much press about payday loans being a form of subprime lending, or articles saying that payday lenders are targeting the poor and elderly, you might get the wrong idea about payday loan consumers. They’re not necessarily old, poor, or uneducated. Many are hard-working middle-class Americans who simply struggle sometimes living paycheck to paycheck.

After the credit crunch zapped most borrowers in the midst of the worst recession we’ve seen in almost a century, the reality is that people make use of credit when and where they can find it. Using credit has become standard in our society as a way of getting ahead. Overusing credit, however, has also become standard for too many of us, who break out the plastic to buy things we simply can’t afford, hoping that we’ll be able to keep up by making minimum payments.

As PersonalMoneyStore.com recently shared on its website, the average payday loan customer might surprise you. Their average customer was stable, having lived at the same address for three years and worked at the same company for six, they were in their mid- to late-thirties, and many of them were homeowners.

So where does all this concern over consumer protection come from? The main problem with payday loans is the high interest rates they charge. When viewed over the course of a year, interest rates are typically 300% or more. That means a payday loan will cost you three times the amount you borrow – if you borrowed that amount for a year.

Payday loans don’t operate that way, though. They typically have to be repaid on the customer’s next payday, which causes people to think differently about interest rates. Customers don’t look at interest from an Annual Percentage Rate (APR) perspective, but tend to think in terms of X number of dollars per hundred borrowed instead. Since the loans are small, the actual amount of interest being paid also looks small, that is if the borrower pays the interest only once.

That isn’t the way it usually works out, though. It’s far more typical for customers to roll over their payday loan at least once, and it’s typically a lot more than that. In fact, the average customer rolls over their short-term loan around 10 times before it’s paid in full. Do they know this in advance? It’s hard to say.

Many consumer advocates as well as those in the government are concerned about payday lenders draining American’s wallets for what is assumed to be a short-term loan product. Although the terms are clearly spelled out, and most customers spend a good amount of time reviewing the information, customers are still out plenty of money for payday loans that drag out over months. To relieve this problem and give consumers protection, many states have enacted payday lending laws that help those in debt. To learn more about the payday lending laws in your state, visit this state-by-state guide.

Payday loans are small, short-term personal loans usually secured by a post-dated check or ACH withdrawal from a personal checking account. All that’s needed in most cases is a copy of your most recent paystub, and you can get payday loans fast either in person or online.

Although they are often marketed as a cash advance, payday loans are not as simple as that. If you got a cash advance directly from your employer, for example (something that almost never happens anymore, unless you are lucky enough to work for a friend or family member) he or she would simply pay you a little bit early. There would be nothing to pay back, because it’s money you’ve already earned, or will earn.

With a payday loan, you’ll have to pay back the original loan amount, plus interest. “That sounds reasonable enough,” you’re thinking. While it’s true that paying back the principal plus interest is the typical arrangement for a loan of any kind, the amount of interest you’ll pay on payday loans is far higher than what you’d expect to see for any other type of lending, even high interest credit cards.

To make matters worse, most people who take out one payday loan usually end up renewing it many times, on average for about six months. In the end the interest they will have paid is often more than the original loan amount, and the costs have set them back considerably from their original financial position.

So why are people still taking out payday loans? The answer may not be simple, and there are several reasons people are still using payday loans.

The first reason is convenience. Payday lenders are spreading through neighborhoods and setting up shop right next to grocery stores, convenience stores, and liquor stores. They have longer hours than other financial institutions, and they are readily accessible online at any hour of the day.

The other reasons that payday lenders have been so successful are less clear. Many people think they don’t have good enough credit to qualify for a lower interest personal loan from a traditional lender, even in some cases when they might be eligible for a traditional loan. In addition, most people believe they will be able to pay back the loan right away, that they’ll avoid getting sucked into the cycle of debt that has made payday lenders so successful. No one wants to think it will happen to them.

As with any loan, be cautious and always read the fine print. Examine the alternatives before you take out a payday loan.

When used wisely, payday loans can be a great comfort in times of emergency. They offer a service that can’t be matched by traditional lenders, and the speed and convenience of payday lenders can help customers escape financial nightmares.

Everybody loves the promise of easy money, but people in desperate need of cash can sometimes be drawn into a trap with payday loans. As with any financial product, you must be prudent when using payday loans. Always examine the repayment terms and interest rates to avoid falling into a cycle of debt, and follow our tips for using payday loans safely.

1. Don’t use payday loans for optional expenses. If you want the money, but don’t need the money right now, try socking away a few dollars from every paycheck. Saving for the things we want is an important step toward financial independence.
2. Borrow only what you can afford to repay. Most people operate on a budget. They know when bills come in and when they have to be paid. If you know can borrow from your next paycheck (which is essentially what a payday loan offers) without putting yourself behind, go ahead and do it. If, however, you are borrowing money that you have no way of repaying, you will be more likely to get caught up in a debt cycle that quickly spirals out of your control.
3. Consider other options. Payday loans come with extremely high interest rates for the services they offer. If you have decent credit, even if you have a few blemishes on your credit report, you may be able to qualify for a personal loan from a bank or other lending institution. If you’re not sure how good your credit is, consider buying a copy of your credit score or use this credit score estimator.

If you find yourself facing a financial emergency, it’s important to deal with the situation right away, but you shouldn’t panic. Depending on the amount of money you need and how long you have to put it together, you may have options you’re not considering if you’re in a state of panic. Borrowing money from friends or relatives can cause a strain on the relationship, but paying it back promptly will smooth things over nicely.

If you need the money to pay a bill, try working with your creditor. Explain your financial situation and see if they will make payment arrangements with you to take care of the account.

Payday loans can be a useful tool when dealing with financial crises. As long as you know you can pay back what you borrow, and you’re using the money only for things you absolutely need, they can be a great tool to save you from life’s other hassles.

You’ve been rolling over one payday loan after another, never sure when you’ll be able to get rid of the debt completely. The money you’re paying in interest charges every payday is taking a serious bite out of your funds, and you’re desperate to get out from under the shadow it has cast over your life.

Take heart, dear reader. You can pay off your payday loan, but it won’t be easy or quick. Quick and easy is how this mess got started after all, right? To dig yourself out, you’ll need a plan and the commitment to pay back the loan once and for all.

1. The best option for repaying your payday loan is to pay it off with your next paycheck. This was the original idea, anyway. If you can find other ways to meet your financial obligations for the next few weeks, you may be able to get out of the payday loan cycle of debt. Put off another bill, ask if you can borrow money from a friend or relative until you’re back on your feet, do whatever it takes to get rid of your payday loan now.
2. If you simply can’t pay off your payday loan in one fell swoop, make payment arrangements. Some states protect consumers with payday loan laws that allow customers to make payment arrangements if their loan has been rolled over a certain number of times. If your state doesn’t offer these protections, contact your lender and ask if you can make payment arrangements.
3. If you can’t make payment arrangements with the lender, make them with yourself. That’s right. You can set up a plan to eliminate your payday loan in a few short weeks by rolling over only a portion of the original loan. Try reducing your payday loan by 25% for the next four pay cycles. You will still be hit with interest charges, but they’ll be smaller and smaller each pay period. In a month, you’ll be out from under the shadow and on your way to financial stability.

It’s easy to get sucked into the lure of easy money that payday lenders dangle in front of cash-strapped customers. Don’t blame yourself for getting stuck in a cycle of debt. Most payday loan customers end up rolling over their debt for months, some do so for years. Instead of beating yourself up over it, make a plan now to rid yourself of the debt.

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’ve ever asked someone with any financial sense at all whether you should take out paydays loans or a personal loan, you probably received your answer very quickly. Personal loans are always better if you can get them. But is that necessarily true? Is it really always better to take out a personal loan? The answer may not be as simple as some people would like to make it.

Don’t get us wrong. We’re not saying you’ve received bad advice. When you add up the dollars and cents, it almost always makes sense to take out a personal loan instead of a payday loan. After all, if you take out a personal loan for $400 at 12% interest rate (which is actually a bit high for personal loans), your payments are just $35.54 per month. In the end, you pay back about $416.

Simple math will tell you that you paid $16 dollars to borrow the money. If you had taken out a payday loan on the same amount and the same stated interest rate, you will make one repayment of $448. Not only will you end up paying $32 more to borrow the money, but you will have to pay it all back at once.

Thus, many people are told that they should always consider a personal loan instead of a payday loan. However, here are some instances when the payday loan might make better sense for you:

• You need cash right away. Payday loans can generally be processed in less than an hour. Personal loans may take much longer.

• You are expecting a sizable paycheck and can pay the payday loan off without problems, but the added monthly bill of a personal loan repayment would create a hardship for you.

• A personal loan would require collateral. If you don’t have anything valuable that you are willing to risk losing, an unsecured payday loan might be a better option. Generally speaking, unless your credit is stellar, personal loans require some form of collateral.

• You don’t want to bring a cosigner into the mix. Again, those with less than perfect credit often require a cosigner for personal loans. Having friends or family member cosign a loan for you is the fastest way to damage your relationships. Sometimes it’s just better to keep others out of your financial business.

Payday loans have received a really bad rap, especially in recent times. The idea behind a payday loan, if you’re on of the wise ones who have left them alone, is that you borrow a small amount of money (typically no more than 80% of an average paycheck), accept the fact that you’re going to pay a shitload of interest compared to other loans, and pay the loan back as soon as you pick up your next paycheck.

The reason so many people are up in arms about payday loans is that they do charge exorbitant interest rates and tend to trap people into a cycle of repeatedly borrowing money. The interest rates advertised are typically between 9% and 14%, which doesn’t sound too bad until you realize that the interest rate does not use the standard annual percentage rate (APR) which banks, credit unions, and other money lenders typically use.

The interest rate for payday loans is simple interest. You pay back X% of what you borrowed, in addition to paying what you borrow, all on your next payday. The 10% or 12% loan you are taking out would be considered a 300% to 400% interest rate, if the payday loans company was using a traditional APR calculation.

The bottom line with payday loans is this: If you can get any other kind of credit, leave the payday loans alone. You don’t need all of that interest in your life.

However, if your credit is trashed, either because of your poor decisions and money management or because of circumstances beyond your control, and you find yourself in a bind when you need cash, and need it now, payday loans are a viable option.

Let’s face it, there have always been payday loan “organizations” around. It’s just that, before the business became legitimized, your collateral was your legs. If you didn’t pay up, Vinny and Tito were dispatched to have an ugly and often painful conversation with you about your lack of responsibility.

Payday loans are, in some ways, today’s loan sharks. But instead of sending someone to break your legs if you don’t pay, they hold on to a signed check for the amount you owe and simply deposit it themselves if you don’t show up and pay. If your check bounces, they take care of business through the court system. While no one wants to be dragged into court over a sum of money that doesn’t even equal a full paycheck, it beats the hell out of getting the hell beat out of you.

The bottom line with payday loans is that they’re an occasionally necessary evil. Use them sparingly and get out of them as quickly as you can.

Image by Micah Sittig

Many households across the world are in the firm grip of the credit crunch It comes as no surprise that unsecured, short term payday loans are becoming a more and more popular choice of credit.

Applications for payday loans are going through the roof. It is no wonder that many have started to wonder where all the money is going. What is it that everyone is spending their payday loan money on? What makes the high interest rates worth it?

1. The Right Reasons to Take a Payday Loan A look at when payday loans can be a good idea. Also covers when they should be avoided.
2. Good and Bad Reasons for Taking a Payday Loan A look at when payday loans are the answer to your financial questions and when they are best left alone. Helping people work out whether a payday loan is the right choice for them.
3. Take a Payday Loan to Help with a Cash Emergency A look at how short term lending options can be a last resort in cash crises. When should this option be considered?
4. Taking A Payday Loan to Keep Your Credit Clean A look at this and other things a payday loan can be spent for.
5. Pay to Survive a Work Hours Cut with a  Payday Loan Using short term credit to
6. Survive a cut in hours or other work related financial crisis.
7. Is a Payday Loan the Solution when Stranded Abroad Can those stuck overseas use a payday loan to fund them out of the situation? A look at the logistics of funding emergencies overseas.
8. Using Payday Loans to Beat inflation? A look at how short term borrowing can be used to help when times get tight. Are payday loans the solution?
9. The Best Reasons to Go For a Payday Loan? What should borrowers use payday loan to pay for? Some good and bad examples.
10. Use Payday Loans to Pay Urgent Expenses When payday loans can help bride a funding gap. Helping consumers out of a cash flow crisis.
11. Pay for the Basics With Payday Loans Funding daily life during low cash periods with payday loans. Good or bad idea?
12. Pay For Emergencies With a Payday Loan A look at this short term credit solution to unexpected financial headaches. Is payday borrowing the answer?
13. Use Payday Loans to Fund Student Lifestyle? Can students and recent graduates benefit from the payday loan format when short of cash?
14. Avoid Late Payment Fees By Taking a Payday Loan Is the short term credit format an economical way to avoid paying fines and charges? Should payday loans be used to pay other debts?
15. Pay Bills With a Payday Loan? Suggests that short term borrowing could be the solution in a cash flow crisis. Explains the process.
16. Can Payday Loans Help Pay for the Holidays? A look at the pros and cons of taking a payday loan to fund celebrations. Is this a good long term strategy?
17. Using a Payday Loan to Fund a Car Purchase? Motor loans experts examine the plus points and pitfalls of a payday loan. Is this a good way to pay for a vehicle?
18. Take a Payday Loan Just to Carry Cash? Is it worth borrowing against the next paycheck in order to be able to flash the cash? What are the ups and downs of this type of borrowing?
19. Payday Loans can Pay For Christmas? One lender encourages borrowing to enjoy the festive season. Why take a payday loan for Christmas.
20. Funding Festivities With a Payday Loan Can a payday loan help pay for Christmas celebrations? How can consumers get a payday loan for Christmas?
21. Payday Loans for Funding Bad Habits? Blogger warns against the dangers of spending money on cigarettes and alcohol in the middle of the month if it will leave consumers short of cash later on.
22. Payday Loan as Emergency Fund? A look at using the option of paycheck secured borrowing to fund unforeseen outgoings. Why payday loans offer a simple solution in this situation.
23. What Should Be Paid For With a Payday Loan? A look at the wrong and right reason to opt for short term credit of this kind. Sensible evaluation of payday lending.
24. Some Common Things to Pay For With Payday Loans A look at some of the reasons why consumers opt for paycheck credit advances. Including gifts, vacations and more.
25. Use Payday Loan to Pay off Loan Sharks A look at regaining control of borrowing by taking a payday loan to pay off less scrupulous lenders. Looking at the benefits of this option.
26. Paying for a Once in a Lifetime Opportunity With Payday Loan A look at some of the reasons people borrow against their paycheck and whether it is wise.
27. Pay for Vacations with a Paycheck Advance? A look at whether accessing short term credit against the next paycheck is the best way to buy a getaway? Includes alternative funding routes.
28. Use New Year’s Money to Pay For Christmas How Payday loans can fund the holidays, a look at why and how to take out a Christmas payday loan.
29. Buying Wedding Bands or Engagement Rings With Payday Loans A look at how short term credit can help couples get those rings on their fingers.
30. Pay to Get Away With a Payday Loan Funding vacations with short term credit borrowing. A look at the ways to pay for a break without breaking the bank.
31. Pay for a Car with a Payday Loan? A look at auto finance options. Includes overview of other ways to finance a vehicle
32. Use Payday Lending to Fund Things The Banks May Have Loaned For in the Past A look at why payday loans are so popular since banks put the lid on lending. Advice on how not to fall into the payday debt trap.
33. Payday Loans Perfect Way to Pay to Stay Away from Overdraft With bank borrowing fees on the rise, payday loans can be used to pay for things that may have, in the past, been funded by dipping into an overdraft.
34. Payday Loans Pay for Emergencies, Funs, Car Repairs and Guests A look at the diverse uses for unsecured paycheck credit. From the serious need to the treat.
35. Use Payday Loans to Pay Away Short Term Problems Avoid defaults by taking short term credit against future paychecks. A look at this short term solution.
36. Military Personnel Use Payday Loans for Medical Expenses A look at special military payday loans and the reasons service people take them, including medical expenses.
37. Five Things to Spend a Payday Loan On A look at some popular reasons for taking out a payday loan. What do people pay for with payday loans?
38. Canadians Use Payday Loans to Fund Unforeseen Outlay A look at the Canadian payday lending market and one popular reason for short term credit borrowing.
39. Pay For Family Emergencies With Payday Loans A look at how payday lending schemes can help fund families in times of crisis. Why should and how can families find payday loans.
40. Payday Borrowing Best For Unexpected Bills? A look at the trend towards borrowing against the next paycheck to make ends meet. Explains the popularity of payday loans.
41. People Paying their Way Through the Recession With Payday Loans A look at how short term lending has become a common crutch for the credit crunch consumer. What makes paycheck borrowing so popular?
42. Pay Santa with a Paycheck Advance A look at payday borrowing to fund the holidays and festive period. Why is this option popular?
43. Animal Lovers Using Paycheck Credit to Pay for Vet Treatment A look at why so many pet owners are borrowing from the future to fund four-legged-friends’ medical attention. Are there alternatives?
44. What Is A Short Term Personal Loan Hard times call for quick help some times. Can a short term loan be the answer?
45. Tips for Getting the Best Payday Loans Bad credit has no baring on the ability to get a payday loan.
46. Instant Cash By Leaps and Bounds Learn how a cash advance payday loan works.

Image Credits: stallio