5 Ways To Avoid Payday Lenders
Once again we have a story about a payday lender being fined by a government for unfriendly practices towards consumers. Cash America International, which has both pawn shops and payday lending offices, was fined $19 million dollars for improper paperwork towards military personnel and also destroying records when the federal government came calling. Whereas states had gone after some of these folks previously, this time it was the Consumer Financial Protection Bureau that went after an agency, and it’s one of the largest fines, which includes refunds, ever thrown at one of these types of companies. And yet, they don’t have to shut down, only tighten up their processes and paperwork.
This is a good time to warn all of you against even getting started with any of these types of companies. We’ve often written in this space about the dangers of payday loans, so we’re not going to rehash that one. Instead we’re going to offer you 5 ways to start thinking about your money so you don’t get yourself trapped into one of these schemes. And yes, some of these we’ve touched upon in the past, but they bear repeating.
1. Start putting some of your spare cash and change away in a safe place for quick access later on. Most people who go for payday loans are looking for amounts less than $100, but those amounts escalate quickly based on the terms of the lenders. If you started putting some of your cash and change in a place like a jar in the bedroom or your office you’d notice it accumulating faster than you’d think it would. I find that once a month, when I go to rolling some of my change up, that I’ll have $30 or so, and still have change left over. Not only that but I have a different jar where I store change that I’m not going to roll. If I ever need a quick $20 or so, I have it.
2. Stop impulse buying. The first time I ever heard about payday loans, it was talking about someone who wanted to go to a concert and needed the money Wednesday but didn’t get paid until Friday. Sometimes you have to be willing to pass some things up that aren’t critical to protect your finances. If it’s something big like a water heater or furnace, you wouldn’t get those loans from a payday lender anyway. There will always be another concert.
3. Plan your money ahead better. I didn’t say the “b word” but maybe I should. I tend to believe that everyone should look at least a month out with their money, planning for what needs to be spent versus what you want to spend for other things. One can always modify the foods bought and save money there if needed as long as you look far enough ahead. Other things you might normally do you just might be willing to skip on so you can do something or buy something special.
4. Do some comparison shopping online. Just because a deal looks like a good one doesn’t mean it actually is all the time. One store’s deal might be another store’s normal price. I have found stores that offer a discount on something that I can actually get for much less elsewhere. Maybe you switch brands for something that’s more cost effective; brand names don’t always mean they’re the best.
5. Always borrow from yourself first. This is a scary concept but it’s something that makes you think about your spending. You might have an insurance policy that you can borrow against and pay back on it; that’s your money and it’s one thing to consider. Maybe you have something you can quickly sell and get the money that you need quickly. The thing about thinking of these things is that you might hesitate to touch things like this, you’ll talk yourself out of it. That’s being smart, and it makes you realize that you don’t need everything just because you want it.