When Payday Loans Make Financial Sense
May 24th, 2011 Filed under: Accounting Tips — Accounting AuthorWe all know people who are at the opposite end of the spectrum from ever becoming a CPA. Maybe it’s an ex-boyfriend or -girlfriend, someone who can’t balance a checkbook to save their soul. Maybe it is your old philosophy professor, or the guy who cleans the office where you work after hours. In any event, these very non-CPA types still know one basic thing about money: you want to pay out as little as possible and keep as much as possible.
Easier said than done, of course. But it’s a universal goal, understood in all cultures by anyone with a few functioning brain synapses.
But the standard advice from personal financial counselors is relative simplistic: spend less than you make, and manage your debt. This is solid advice. But in short-term situations, life and money do not work out so perfectly.
Say you’re earning about $300 more per month than your monthly expenses. You’ve learned to cut back and you even found a better paying job. Points in your favor, well-deserved. But one month you get hit with two ugly things: a health insurance premium increase (due to your employer reducing its contribution), plus a car repair that is essential in order for you to be able to get to work. That $300 surplus turns into a $600 deficit for that month. And since you don’t have a credit card, or choose not to use it, what do you do?
If you’re trying to rebuild your credit rating, a bad credit loan might just be the place to go. Payday loans (another name for it) are generally given poor press for having steep annualized interest charges. But no one keeps a bad credit loan for a year. Your payday loans are best held for a month or less, just a short-term method of financing that helps you pay your bills on schedule. When you hit your due dates on invoices, particularly credit card and mortgage charges, you avoid interest hikes and reports to credit agencies.
Payday loans are not to be used lightly, glibly or cavalierly. They are best used to get past a difficult short-term period, then paid off within a few weeks.
One Response to “When Payday Loans Make Financial Sense”
By kennedy on Jun 6, 2011 | Reply
Payday loans are fast and easy to obtain! And they can help you in those unfortunate circumstances with those unexpected bills… There are many payday loan companies out there so make sure you do your research. It’s great because you can get the money you need when you need it most and you can pay it back with your next paycheck or in installments – depending on which company you go with. Signing up is easy and if approved you’ll recieve the money with in the next day! I had to apply for a payday loan before to help with some bills – it was easy to do and such a stress reliever!