How to Get Out of the Payday Loan Cycle

With a payday loan, you borrow a certain amount of money from a payday loan outlet, and you give the lender a check which includes your bank account number on it.This is done because if you don't repay the loan by a specific date, the lender can cash the check you gave them. When you get your next paycheck, you would use some of it to pay back the lender who gave you the payday loan. Payday loans are good for short-term needs but when you use payday loans as a constant method of meeting financial needs, it can debilitate your financial stability long-term. Because each time you take money out your paycheck to repay a payday loan, you have less money to save or pay bills, which keeps you dependent on payday loans.

Instructions

1

Increase your income. If the job you have doesn't pay enough money for your financial needs, look for ways to earn extra money so you can repay the payday loan quicker and not have to take out another one. Get a second part-time job if possible or sell some items in your home that you no longer need to friends, relatives, or neighbors.

2

Cut out unnecessary expenses. If you're getting payday loans to purchase things you don't need, stop borrowing for those purposes. After you repay the payday loan, start spending less than what you earn and cancel services that are costing you too much money every month such as cable service or your magazine subscriptions.

3

Borrow only what you can afford to repay. If you only need to borrow $150.00 to pay your water bill and your next check is estimated to be $600.00, don't borrow $500.00 this week because you'll have to repay this amount when you get paid again, and this takes a chunk of your check. This may cause you to need another payday loan, which keeps you in a trap.

4

Put aside emergency funds with each paycheck. According to Credit.com, this is a good way to stop the payday loan trap because it decreases your dependency on the loans for financial emergencies.