Don't tell me. You've nearly reached the end of the month and you've run out of money, but you’ve still got bills to pay? What are you going to do? Are you considering payday loan? If so, I want you to stop. If you’ve been following by blogs, by now you’ll know that I'm not that keen on credit or loans in the first place, but of all the loans you can take out, payday loans are the worst. Why? Because the interest rates are so phenomenally high. Compared to other types of loans or credit cards, where the interest rates are typically between 8-20%, quite often the rates on payday loans can run into hundreds or, at the extreme, even thousands of per cent. Payday loan companies take advantage of people who have little other option and charge them excessive amounts of interest which they can’t really afford to pay. To me, that’s just not right.
However, the good news is that there is another way. With a little bit of forward thinking we do something to stop us getting into that situation in the first place. That may sound like it's easier said than done, but actually, it's not as hard as you might think. To start improving your finances, there are just two things I’d like you to do.
The first job for you is to look at your bank statements for last 2 or 3 months, add up the cash you've spent each month and compare it to what you've earned. Are you spending more than you’re earning? If so, take a few minutes to look at the types of things you’re spending your money on. Once you understand that, you can begin to do something about it, such as by changing your spending habits so that you can live within your means.
The second thing that I want you to do is to set up a savings account with your bank and put a small amount of money into it every single week or month, depending on how often you get paid. You could also use a jar in the kitchen side, as our grandparents would have done in the past, but it's smarter to use a bank account because you can set up a standing order to make the transfers automatically so you won’t need to remember. If you take these two actions, not only will you start living within your means, but you'll also be building up a cash buffer to help when those situations arise so you won't have to reach for a payday loan.
I know those two things are incredibly simple, but the point is most people don't do it, often because they don’t want to confront the situation. However, it only takes an hour or so to do and if you get into the habit of doing this every month you’ll soon be on your way to a more solid financial future so why not bite the bullet and start doing this today? You’ll be glad you did.
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