According to a report produced by the Consumer Financial Protection bureau, the average person who uses payday loans spends about $458 per year in fees. Any amount can feel like a fortune, however, for people who may be living paycheck to paycheck. If you're in this predicament, here are three ways to carve out money in your budget to pay off your payday loans.
Temporarily Give Up Small Luxuries
It may seem like you're already squeezing every penny out of your budget, but you'd be surprised at what you can uncover when you take a good look at your expenses. For example, your daily latte could be costing you $21 per week (at $3 per latte, 7 days a week). That's an average of $84 every 4 weeks and almost $1,100 per year. A $5 pack of cigarettes per day works out to be about $150 per 30 days and $1,825 per year. That's more than enough money to pay off a short-term loan and put some cash aside for emergencies.
If you're not already doing so, track your spending for a few days to see where you're money is going and the cut the things you can live without for a little while to free up some cash. You may also want to look for lifestyle changes you can make that will add a few extra dollars to your wallet. For instance, take lunch to work instead of buying a meal at a fast food place, or buy generic versions of the foods you eat rather than the store brands.
Strategically Defer Other Bills
Another way to make room in your budget to pay off a payday loan is to defer payments to your other bills. Ideally, you'll want to defer bills where you're already current and that won't hurt your credit rating if you pay late. For instance, most utility companies don't report your payment history to the credit bureaus, so you won't have to worry about getting a black mark when you skip a payment one month.
Look for Opportunities to Make Quick Cash or Reduce Loan Fees
If you've already pared your budget down as far as it will go or you don't have any bills you can defer, the third option is to look for opportunities to generate additional income or reduce the rate the payday loan company is charging you.
For instance, some payday loan companies have frequent customer programs that give clients points for each transaction they conduct with the company (e.g. 10 points for each on-time payment). Customers can then use the points they accumulate to reduce the rate they are charged for their loans or eliminate the fee altogether.
If your loan provider has a similar program, take advantage of it to help you pay off your loan. Apply any money you save in loan fees. This will further reduce the loans fees you have to pay and make it easier to get out of debt.
Another thing you can do is ask your loan provider about its referral program. Some providers will pay customers cash or give them discounts on their loans for each person they refer to the company. If your loan provider does this, look for ways to make enough money in referrals to pay off your loan.
More Options to Consider
Other things you can do in your spare time to make the money you need to get debt-free include:
- Donating plasma to a local plasma center. These companies pay anywhere from $15 to $50 per donation. If you have multiple people in your home who also qualify for the program, your group effort could help you accumulate the cash you need pretty quickly.
- Selling electronics you don't use. There are a number of online sites that buy used smartphones, tablets, and computers. Depending on the model and quality of your device, you could get up to $350 or more for it.
- Using your skills to sell products or services online. For instance, there are a number of websites where you can earn writing or doing graphic design jobs. You can control when you take orders, so you only do as much as you're able in your free time.
Most payday loan companies will allow customers having difficulty paying off their loans to set up payment arrangements. If you're not able to come up with the money to pay the debt, it's a good idea to discuss this option with the payday loan lender near you. For more tips or assistance, visit resources like http://money4youpaydayloans.com.