7-Step Financial Plan to Reduce Payday Loans

[Aug 6, 2010.]

 

Nearly every consumer has faced a scary moment or two when there was simply not enough money in the bank to pay an unexpected bill or to get a much-needed car out of the repair shop. The best payday loans can be a short-term solution to your problem and have helped thousands of consumers in their time of need.

If you find yourself relying on payday advance loans on a regular basis, though, you may be in need of some financial counseling.

Personal finance expert Beth Kobliner recommends several steps to help you develop a solid financial foundation so that you can begin paying into a savings account, get out of debt, increase your access to credit, and reduce your reliance on short term payday loans.

Here are Kobliner's seven suggestions:

1. Pay your bills on time. A late payment, or worse, a missed payment, can reduce your credit score dramatically and impact your ability to qualify for low rates on a credit card or a car loan.
2. Sign up for automatic billing. If you receive and pay your bills automatically online, your chances of a late or missed payment are minimal. You avoid late fees and your bank won't raise the interest rate on your credit card or loan.
3. Pay off your debt according to interest rates. Consumers with the best handle on their debt pay off their credit card balance every month. But not everyone has the income or ability to do that. Start to reduce debt by paying off as much as you can on the balance with the highest interest rate, even if you have to pay just the minimum on other cards. If you have high interest payday loans, pay those off first.
4. Reduce your student loan payments. Ask your lender to stretch out your payments over time on private loans. If you have federal loans you may qualify for income based repayment plans that can help you save money.
5. Pay more than the minimum on your credit cards. Even if it is just a few dollars more, you can pay off your balance much faster if you go above the minimum. Always at least round up your payment.
6. Ask for a lower rate. Call your credit card company and ask for a lower interest rate.
7. Ask for help. Talk to your creditors and try a free consumer counseling session from the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.

Building a financial foundation can make the difference when it comes to emergencies. In the meantime, short term payday loans may be the solution for your immediate needs.

 

About Author:

Michele Lerner is a freelance writer with twenty years of experience writing articles and web content for newspapers and magazines on topics related to real estate, personal finance, and business.