If you’ve been in the blue or no-collar working world for awhile, you know just how hard living paycheck to paycheck can be. Come the first of the month, the bills come due, and you’re looking at your paystub to see that you can barely cover all your expenses with what you made this month. And, in many cases, you still don’t have enough.
This is how the vicious cycle that is taking out payday loans begins. Often enough, families struggling just to get by, let alone get ahead, suddenly have a utility bill that’s higher than they’re used to because the winter was particularly cold and you had to crank up the heater, or because you suddenly had to repair a big hole in your roof, or because you had an unexpected, medical emergency.
None of these are anybody’s fault, but the cold hard truth is that when these expenses pop up, you’ve got to pay them on time, and there’s no way around it. For many, payday loans seem like the only option that will work. This will lead to a cycle of getting a payday loan, only to rack up so much interest that you can’t pay it back, leading to another payday loan, and on and on it goes.
While I’m not going to lie to you and say that there are any easy ways out of these situations, at the absolute least, you shouldn’t be relying on payday loans to fix your problems. If you’re struggling to make ends meet, or need a solution to help get you out of rut, here are four alternative solutions to payday loans you should consider.
Another Job or a Second Job
This may seem like an obvious solution, and I’ll admit, it’s simpler to discuss than to actually do, but if you’re struggling to pay your bills, you may need to consider a different job. Most of us work to live, not the other way around, so if your current job not only keeps you from living the life you want, but doesn’t even cover enough to allow you to survive, then that’s more than reason enough to consider going somewhere else.
Again – I know for many, this is not a feasible option. Though the job market is steadily improving, it’s still extremely competitive, and in the end, it doesn’t matter how many jobs are available; if you don’t have the skills, you’re not getting hired. To that end, take every opportunity you have to gain additional knowledge and new skills right now. I don’t necessarily mean you have to go pursue an associate’s degree or a bachelor’s, though that certainly would be ideal, but even taking the time to do some self-study, or get some coaching by your supervisor or co-worker, can help you increase your marketability.
If a completely new job is out of the question, see if there are any positions within your company that you qualify for, and pay more than what you’re making now. You might also ask your supervisor if you can get a raise, or at least an advance on your next paycheck, to settle your debts.
If all that fails, you may simply have to consider a second job, such as driving for Uber or doing some freelance work, to supplement your income, at least until you can stabilize your finances.
Set Up a Payment Plan
One of the big problems that people have when they find themselves struggling to pay bills is the timing. Often times, people could 100% meet their obligations just fine if they had an extra week or two, or could afford to pay in smaller chunks, rather than one massive amount that’s due no later than the first. If this is the case for you, see if you can set up an alternate payment plan for your bills.
This can be tricky, and there’s no guarantee of success, but you’ve got nothing to lose. Reach out to your insurance provider, or your utility company, or your landlord, and see what you can do about getting more time to pay, or if you can pay in smaller chunks. Calmly explain your situation, and be prepared to be told “no,” but don’t lose hope. Many companies have riged billing policies that they have to abide by, but you’d be surprised how many representatives and customer service agents can both empathize, and relate, to what you’re going through, and will go out of their way to help you. Again, you’ve got nothing to lose by asking.
Take Out a Personal Loan
You may be hesitant to take out a loan for any reason, whether because you’re afraid of an additional commitment, or because you feel that having to rely on a loan means you’re a failure. I completely understand, but the fact is that if you’re considering a payday loan, you’re already at that point, and a personal loan is a much more secure option for you.
First of all, personal loans tend to have much longer loan cycles than payday loans, meaning that you could have anywhere from several months to several years to pay off your loan, as opposed to the typical paycheck to paycheck cycle of payday loans. That buys you time, and helps you to save money in the long run.
Second, personal loans tend to have lower interest rates than payday loans meaning you’ll stave off further debt.
Finally, a personal loan will allow you to strengthen your credit history and your credit diversity, two key components to enriching your credit score, which will in turn afford you better terms for any future loans you may need.
Put Your Bills on a Credit Card
This certainly isn’t the ideal option, but to avoid the downward spiral that tends to characterize payday loans, it may be your only option. Putting your debts on your credit card, instead of taking out a payday loan, won’t really reduce your debt at all, but it could keep it from spiraling out of control, and buying you time to get more funding together. You’ll still have to pay every month, but rather than a full amount of a payday loan, plus the interest, you now have to meet just the minimum payments to stay in good standing with your card.
Additionally, some cards do offer cash back or rewards points for using them, something you may be able to take advantage of, and help get yourself out of debt faster.