HOW TO PREVENT YOURSELF FROM GOING INTO DEBT

Around three quarters of Americans 
die with debt. It seems it is almost 
unavoidable in the modern world. We all need loans whether it’s to pay for a house, college or unexpected bills. However, much of the debt we accrue over a lifetime can be avoided.

by making smart choices. Having bad credit can leave you worse off when you do take out a loan and bad spending habits can create unnecessary credit card debt. Here are a few tips to prevent yourself from falling into debt. 

Improve Your Credit Score

At some point, it is likely that you will need a loan. The most effective way of ensuring that this loan is affordable is to have a high credit rating. Credit Repair Companies  recommend tracking your credit score progress. By keeping an eye on it, you can ensure it doesn’t slip below 700 – the minimum score generally considered good.

Shop Around for Loans

Often, people take on more debt than they need to by failing to look for the best loan option. If you are not well trained in finances, you may think that reading the small print is too difficult and accept the first loan you find. However, your local high street bank rarely offers the best rate.

If you’re looking for the best mortgage rate, you can overcome a bad credit rating by disclosing your collateral assets and cash reserves. Many alternative lenders will take these into account and offer a lower interest rate. Peer to peer loans may also offer you the money you need at a fraction of the interest ofhigh street banks. This means you can pay off a loan more quickly, avoiding debt.

Pay in Cash

While some loans such as a mortgage or college tuition loan are essential, others can be avoided. Leave your credit card for emergencies and instead only shop using cash. This will ensure that you live within your means and also help you to keep a track of your spending. We all make unnecessary purchases at times. By identifying these and stopping yourself before they happen, you can decrease the likelihood of entering credit card debt.

Debt is not inevitable. Where loans are needed, you can pay them off quickly by ensuring you have a good credit rating and shopping around for the best option. Combined with avoiding unnecessary expenses, you can keep your debts low and pay them off fast.

WHY PAYDAY LOANS DO MORE HARM THAN GOOD

With the number of payday lenders exceeding the number of McDonald’s in the U.S., it is becoming more obvious that people in need of fast money is on the rise. According to a review by the Federal Reserve Bank of St. Louis, there are more than 20,000 lenders across the country, which is an estimated 5,000 more than the branches of McDonald’s in existence.

But is a payday loan the short-term fund solution that you are looking for?

Staggering annual percentage rate (APR)

Sure, you get access to fast money when approved for a payday loan, but what you don’t know is that you end up paying an APR of more than 300%. This can hurt your pocket really bad, whichever way you look at it.

Financial distress

You’re already living from paycheck to paycheck, if you have to pay off your loans in between; you are setting yourself up for deep financial troubles. Studies show that people who rely heavily on payday loans would end up poorer. If you are into repeated use, recovering from all your debts will be real struggle.

Easy to renew

No, you’re not reading it wrong. It may seem hard to imagine for “easy” to relate to anything negative, but it becomes bad when associated with payday loans. Because you can easily rollover your loan, you end up borrowing money to pay for what you previously owed, which adds to more debt. This explains why APRs end up really high, and leads to an unending shortage of cash. For this reason, payday loan rollover is prohibited in Alberta, Canada.

Payday loans are only good for consumers who only need fast money to defer a particular expense or liability. If this is not the case with you, it is best that you seek alternatives; including cash advance from your credit card, borrow money from friends or family or seek consumer credit counseling

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