10 Ways On How To Get Out Of Payday Loan Debt – Part 2
In the. we discussed 5 crucial steps on how to get out of payday loan debt. You can get faster results by combining those five steps with the following strategies. Here you go.
6. “Debt Snowball” Method
The debt snowball method works on a simple principle – “you must pay your smallest debt first (especially the one with the highest rates), not the one with the highest balance (and low rates)”. The outstanding balance on your payday loans might be much lower than the outstanding balance on your home mortgage or car loan. But, the Annual Percentage Rate on those small loans is probably 200 to 300 times higher than the rate on your mortgage or auto loan. Therefore, paying these “small” loans must be your first priority. If that means missing one or two monthly installments on mortgage or auto loan, go for it. They are going to take your car or home back just because of one or two missed payments; such things usually happen when you miss more than six consecutive payments. However, instead of defaulting, it will be wiser to talk to your mortgage or auto loan lender and negotiate some temporary relief. They may allow you to just pay interest for a couple of months and then continue with your regular payments. This strategy can save you a great deal of savings, which you can contribute toward your strategies on how to get out of payday loan debt as quickly as possible.
7. Use Your Retirement Fund
You are saving money in your retirement fund for your future, which is most probably still many years away. It is very important for you to understand that the outsanbding dues on payday loans grow very fast because of the sky-high interest rates and other hefty charges. If your state allows rollover of these loans on non-payment, things can go out of your hand within a couple of months unless
you win a lottery or get a handsome Christmas bonus. It does not make any sense at all to leave a good amount of cash sitting idle in your retirement fund while your debts are growing very fast. If you find no better way to pay off your debts, you can consider using your retirement fund. Once these risky debts are paid off in full, you can start saving again for your retirement. Please do not confuse an emergency fund with retirement fund. The money in your emergency fund is short-term saving for periodic expenses, such as car repair, medical bills, and things like that. On the other hand, retirement fund, as the name suggests, is the money you have saved for financial security after you retire from work.
8. Try Little Things That Can Make A Big Difference
Here is on how doing (or not doing) some little things can make a big difference and help you ensure best results from your strategies on how to get out of payday loan debt.
9. Increase Your Income
While you are working aggressively on your strategies to cut down your expenses to minimum, you can also consider utilizing your skills and qualifications to increase your income. It may mean working overtime, getting a second job or working as a freelancer on a part-time basis. Freelance jobs are probably the best, as you it allows you to work from home. Even if you work just on weekends, it can help you earn a significant amount of extra money. Elance.com can be a great place if you are looooking for a part-time freelance work.
10. Have A Practical And Positive Budget
Most importantly, unless you are working on a practical and positive budget, none of the above strategies may work for you. This always works.
Overall, if you show some great financial discipline and implement these 10 strategies thoroughly on how to get out of payday loan debt, your efforts will definitely bring some great results.
Category: Payday loans