Payday loans are just another
financial tool. You use tools when they help you accomplish a goal more
quickly, more easily and/or less costly than doing the job with other tools or
without tools. The fact that there is a Payday loans industry and it is growing
every day means that there must be some way in which the Payday loan tool
expedites the achievement of financial goals. For a payday loan there is only
one goal and that is to solve a short term cash flow shortage.
The Problem:
The problem that causes demand for
payday loans is that payment of bills is often on a different schedule than
paydays. The problem may be that your bills may be more than expected or there
may be a bill that was unexpected such as a car repair. The problem may be that
the last payday was smaller than expected due to sick days or bad weather preventing
you from going to work. The result is that for a short period (less than 2
weeks or a month) you will spend more than you make in income.
The Standard Solution:
If you have some contingency
savings, you can borrow from them to tide you over. You make room in your next
payday to replace your contingency savings.
If you have no contingency savings
but you have a credit card with some limit room, you can borrow the money in a
cash advance from your credit card or line of credit and allocate money from your
next payday to pay that back.
If it is a matter of paying some
bills late that may be an option. There may be some late fees or charges but
you make sure that you allocate money from your next payday to pay the bills
and the extra charges. If you have certain bills set to be paid by
preauthorized debit you have removed this option from your financial tool
chest. If it is for the rent you risk upsetting your landlord by paying the
rent late.
All of these solutions are
manageable if you have some wiggle room in your budget. The important thing to
remember is to cut back in some areas of spending in your next payday period so
that you pay back the money that you have borrowed from yourself. The short
term cash flow problem can happen often to busy people so you need to keep
yourself in financial shape to deal with spending or income fluctuations.
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