Paycheck Chronicles

Payday Loans - Bad, Bad, Bad

This time of year, we are bombarded with advertisements for quick money. And it is appealing, especially with all the expenses of the holidays. Behind those positive sounding ads, however, is bad stuff. Very, very, very bad.

What's So Bad About Payday Loans?

For example, I just looked up a $300 loan from a payday lender in Texas. For a two week period, or any time shorter, the fee is $76.14. Shazaam! That is a ludicrous amount of money. The same $300, put on a 20% interest credit card, would cost you just $2.30. And I think a 20% rate on a credit card is awfully high.

If just the numbers don't convince you, look at it another way. If you desperately need $300 right now, what will you do when your next paycheck comes and it is already short $376.14? For some people, that is their whole paycheck! Then you're desperate again, because you still need to eat and pay bills.

So, what should you do if you are in need of cash right now? First, you must reevaluate your definition of the word "need." You need food, you need fuel to get your car to work if you can't get there any other way. If you live somewhere very cold, you need heat. But for the next two weeks, there's little else that you need.

But I Have Bills To Pay !

I know it can seem overwhelming, but there are ways to get by.  If your problems are bigger than these solutions, then a payday loan isn't the answer, either.
  • If you have bills due, talk to your creditors. Many times, they can work with you for a short-term problem.
  • Check with your service's relief society. Interest-free, short-term loans with reasonable repayment plans are available through the Navy-Marine Corps Relief Society, Army Emergency Relief, the Air Force Aid Society, and Coast Guard Mutual Assistance.  The relief societies (except the Coast Guard) have reciprocal arrangements to help members from other services, as needed.  Also, all four relief societies have agreements with the Red Cross to provide services in locations that are away from military installations.  You can contact the American Red Cross Armed Forces Emergency Service Center at 1 (877) 272-7337, anytime of day or night.
  • Be creative in scrounging up some cash.  Maybe you have returns that need to be made, or extra stuff you could quickly sell on Craig's List?  Can you pick up a cash job such as bagging at the Commissary or waiting tables?  Do you have any gift cards that could be sold?  There are literally hundreds of ways to make a little money quickly.  Check out How To Make Money Fast or How To Make $100 Today to get your creative juices flowing.
The basic point is to avoid payday loans altogether.  They're designed to be expensive and to suck you into a cycle of continuously paying bjillions of dollars of interest on a small loan.  Don't do it.  They're bad.  Really bad.


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