How to Escape from Payday Loan Debt
Millions of people turn to payday loans every year. According to studies, more than half of them fail to pay off the loan by the due date and end up getting trapped in payday loan debt. Some roll over the loan so many times that by the end of the loan term they pay more in fee than the initial loan amount. So, instead of getting into a cycle of debt, try out the various ways that will help you get out of the payday loan debt trap.
Consolidate Payday Loan
Managing multiple debts with different monthly payment and interest rates is next to impossible. But by consolidating all your payday loans will be combined into one, making it easy for you to pay one single payment every month. The overall interest rate will get reduced as well.
Do Not Take On More Debt
In order to escape from payday loan debt, you should first stop taking on more debt. Also avoid rolling over your payday loans. It can be difficult but it is one of the simplest steps that will help you get out of payday loan debt.
Increase Your Income And Decrease Your Expenses
A great way to get rid of payday loan debt is to increase your income. Once you start earning more, you can use the additional money to pay off your loans and avoid roll over. If you are unable to increase your income then decrease your expenses and all the extra money you save can be utilized to get out of payday loan debt. Going through your monthly budget and eliminating all the non-essential spending will help you free up a big portion of your income.
Create An Emergency Fund
You never know when a financial emergency will happen. The best way to deal with such emergency is to create an emergency fund in advance, instead of waiting until you are strapped for cash.
Create A Budget
If you still don’t have a budget, it’s high time that you create one. A budget will help you to keep a track on how much money you are spending for which category and how much will be left over once you have paid all your bills.
Get Rid Of Unused Stuffs
Organizing a yard sale once in a while will help you get rid of all the unused stuffs from your house and make money. Be a big appliance or a piece of furniture, old kitchen ware or any small household item, you can sell anything that you will never use.
Find Alternative Lending Source
Borrowing from a different source such as credit union or family member can help you to pay back your payday loans. Though alternative lending sources will never get the debt erased, but there are better possibility of finding more agreeable terms and interest rates. You can also find a wide variety of different loans offered specially for numerous financial scenarios. Finding one such loan will make it easy for you to escape the payday loan debt trap.
Opt For Credit Counseling
The main purpose behind credit counseling is to help consumers manage their finances in a better way. Such services usually include help with payday loan debts, money management and budget creation. There are several organizations that offer credit counseling. Such counseling would not erase your debt, but it will help you create an enduring strategy for better management of your debts. Make sure you do your part of researches when opting for such credit counseling organization so that you can find a reputable one.
Consider Debt Management Plans
Debt Management Plans are debt-relief option offered by debt management companies and debt counseling agencies. They will work with your creditors on your behalf and find a monthly payment solution that works in favor of your situation. Under such plan you will have to make a monthly deposit into an account with the agency that will be further used to pay off your bills.
Choose Debt Settlement Programs
Debt settlement programs are another viable way to escape from payday loan debt. Under such program, the organization offering debt settlement service will negotiate with the creditor on your behalf to pay a lump sum settlement amount that will be less than the full amount you owe. On behalf of such services you will have to offer a certain amount of money every month to pay into the settlement, till you have repaid the loan in full.