Beating Broke

Personal Finance from the Broke Perspective

Options When Consolidating Payday Loans

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Payday Loans Consolidation Options

Payday loans can trap borrowers in a vicious cycle. Because you’re short on cash and/or have bad credit, you borrow money from a payday lender. That money is usually due back in a short amount of time (often just two weeks). Yet, because of high fees and interest rates on the loan, you must pay back much more than you originally borrowed. If you’re unable to repay the loan in time, you can always roll the amount over into a new loan. This is how the payday loan trap begins. However, you can avoid or escape the payday loan trip by utilizing payday loans consolidation options.

Options When Consolidating Payday Loans

You don’t have to stay stuck in the payday loan trap. Instead, utilize these options to consolidate your payday loans.

Get a 0% APR Credit Card

If you still have good credit, consider applying for a 0% APR credit card. These types of credit cards will allow you to transfer your payday loan balance onto the credit card. Most of these types of cards charge a transfer fee of three to five percent. Then, you have twelve to eighteen months of 0% APR, which means every payment you make goes on the balance, allowing you to pay it off more quickly. After the introductory APR expires, you will pay the stated interest rate on the rest of your balance.

Get a PALs Loan

Another option offered by certain federal credit unions around the country is Payday Alternative Loans. These loans are available for $200 to $1,000 and are to be paid back in full in one to six months.

To qualify for a PALs loan, you must be a member of the credit union for at least one month. The credit union is especially interested in your income rather than your credit score, making these loans easier to qualify for than a 0% APR credit card. In addition, these loans can help build and improve your credit score.

Borrow from Friends or Family

Payday Loans Consolidation Options
Photo by Rajiv Perera on Unsplash

If you don’t qualify for either option already stated, consider borrowing from friends or family. However, if you choose this option, recognize that borrowing money can often ruin relationships. To keep this from happening, write out a contract stating how much you’re borrowing and when you will pay it back. For good faith, state how much you will pay weekly or monthly. If you want, you could even offer to pay back the loan with a bit of interest.

Then, dedicate yourself to paying off this loan as quickly as possible. Nothing ruins a relationship faster than someone who doesn’t pay back a loan to a family member or friend.

Final Thoughts

Payday loans seem like an easy, quick way to borrow money, but they can trap you in an endless cycle of debt. To break that cycle, utilize one of these payday loans consolidation options so you can stop paying so much in interest and pay off what you owe.

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Tips for Avoiding Student Loan Debt

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As a college student, there’s very little doubt that you’ll end up with some sort of student debt. While college is a big and exciting step in your life, nothing ruins it faster than graduating only to find you owe years and years of money to student loans.

That’s why it’s so important for students to get a financial education before they even head off to college. As a college student, you should already know how to budget, save money, and know the importance of paying bills on time, every time, to build and maintain your credit. That’s also why you should work hard to avoid student debt as much as possible. In this blog post, you’ll find a few tips for doing just that.

Start Saving in High School

While your parents have probably been saving for quite a bit to help fund your college days, it can’t hurt for you to start saving as well. If you have a part-time job in high school, save part of every paycheck up for your college tuition and the expenses you’ll have there.

If you do get in a fix with your student loans after you graduate, search for debt relief through a strategic debt consulting company as soon as possible, instead of just letting the late fees and interest pile up. Look up local loan places to schedule a meeting or consultation with a professional who can explain all the angles and plans available when it comes to restructuring debt.

Make Good Grades in High School

One way to avoid a ton of student debt is by making good grades all through high school. There are quite a few academic scholarships offered for those who excel in school, and you could get one of them. Of course, there are also athletic and other types of scholarships available to those who qualify.

Fill out the FAFSA

FAFSA stands for a Free Application for Federal Student Aid and it’s just that, free aid. It’s money that you don’t have to pay back, if you qualify for it, and helps with things such as tuition, books, and other school-related stuff. While it may not cover everything, this will cover quite a bit. The rest you can make by working part-time or applying for a very small amount of student aid that will need to be paid back after you graduate.

Live at Home 

While many college students don’t want to hear this, sometimes living at home is the best way to avoid student debt. You don’t have to pay for room and board, your parents will feed you, and many times you don’t even have to work until you graduate. Living at home while you go to college is a major money saver.

Stay Away From Credit Cards

Credit card companies often prey on college students knowing that they’ve never had a credit card before and that many don’t understand how they work. It’s best to avoid credit cards while you’re in college, and even when you get out of college if at all possible. The interest rates are high, and once you miss a payment it’s almost impossible to catch up.

Explore All Your Options

While there’s no surefire way to pay for your college out there, there are quite a lot of options to consider. Don’t decide that a student loan and getting into debt is the only way to go until you see what else is available and what you qualify for. From AP classes to scholarships and from financial aid to living at home, there are things you can do, so don’t give up.

These are just a few ways that you can avoid student debt when it’s time for college. Remember, start saving early so you can get the education you deserve without getting into debt you can’t pay off.

How to Combat Frugal Fatigue when Being Gazelle Intense

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My husband and I recently added up our student loan and credit card debt.  Imagine our shock when we discovered we have $58,000 in debt!  What was this debt comprised of?  It is made up of nearly $38,000 in student loans, $6,500 on a business credit card for a business that failed and $13,500 of personal credit card debt spread over two cards (the smallest balance at $1,000).  The latter debt is largely due to our current low income and some not so wise purchases.  We’ve recently become gazelle intense.  However, we’re being careful to combat frugal fatigue since we know we’ll need to live this lifestyle for quite some time.

Gazelle Intense

What a Gazelle Intense Day Looks Like for Us

At the urging of everyone around us, we began to follow Dave Ramsey.  Because we do not yet own a house but would like to in the next three to five years, we decided to become gazelle intense, as Dave Ramsey says.

What does gazelle intense look like for us?  My husband works away from the house for 10 hours a day.  After spending an hour with the kids when he comes home, he works on his dissertation and articles for publication for a few hours a night.

I stay home with the kids all day and blog, do virtual assistant work and freelance writing when the kids are napping and after they go to bed.  On the weekend, I typically leave the house for about four hours on both Saturday and Sunday to get more freelance work done.  I estimate that I am working 25 hours a week from home.  My husband is putting in another 20 hours a week at home doing work that will further his career and hopefully lead to a high paying, tenure track job in a few years.

Being Gazelle Intense Works!

Our hard work is paying off.  In just two weeks, we “found” an additional $701 to apply to our debt beyond our regular debt repayment schedule.  We found this money several ways.  First, we returned a few items we bought but hadn’t used before becoming gazelle intense.  Then, we also got an unexpected check that we put toward the debt.  We just paid off our first credit card with the lowest balance.  Next on our plan is to pay off the credit card with $6,500 within the next four weeks.

Getting Used to a New Lifestyle Takes Time

Gazelle Intense
Photo by Louis Hansel @shotsoflouis on Unsplash

As anyone who has become gazelle intense knows, there is a period of adjustment when you have to get used to the austere lifestyle that is required.  Let’s be honest—most people who have credit card debt have at least some of it because of a lack of impulse control and planning.

Was all of our credit card debt due to that?  No, we had a very low income for awhile when my husband’s graduate student teaching stipend was our only income, and we relied on credit to make ends meet.  However, we also ate out more than we needed to.  (Do you ever need to eat out?)  Our debt likely would be lower if we practiced more self-control with ourselves and our finances.  Since we weren’t stringent with ourselves then, we’re having to be now.

How to Maintain Gazelle Intensity for Months (and Years)

Gazelle intensity works with no break if you have a relatively short amount of time you must be laser focused.  If you can get your debt paid off in 12 to 18 months, you shouldn’t need a break.  However, if you’re looking at several years to pay down your debt, you will likely need to give yourself an occassional break to avoid frugal fatigue.

Take a Break After Each Debt

Because there is such an adjustment, to maintain your gazelle intensity and avoid frugal fatigue, consider rewarding yourself for each debt that you pay off or at a milestone you set.  If you have one large debt to pay off, maybe you will reward yourself for every $5,000 you pay off.

For us, since we love to eat out and now no longer eat out at all, we have decided that we will have one meal out every time we pay off a debt.  To maintain your drive, pick one thing you used to enjoy spending money on in your old, less frugal lifestyle, and commit to enjoying that activity once when you achieve your assigned goal in your debt snowball.  Keep it reasonable, less than $50, so you don’t derail your snowball, but give yourself that leeway to maintain your intensity.

Gazelle Intensity Interval Training

Another option is to do gazelle intensity interval training.  If you have a lot to pay off like we do, you may need a different strategy to keep up your motivation.  For instance, maybe you can commit to three months of intensely working and paying down your debt.  Then, you will take a break for one month.  Or, maybe you decide on an amount that you’ll pay down, and then you’ll take a break.  Maybe you decide to pay down $15,000 and then slow down in intensity for a bit. As you become invigorated again, set another goal that you’ll pay down before you rest.

Final Thoughts

Being gazelle intense definitely has rewards.  You put yourself in a painful place for an intense while until the debt is paid off.  Then, you begin to reap the rewards of all your hard work.  You can live like no one else, as Dave Ramsey says.

Yet, be careful not to become so strict with yourself that you give in to frugal fatigue and derail your debt snowball.  A small, planned out treat is often all it takes to keep you motivated and ultimately debt free.  If you’re confronting a large amount of debt, consider instead to be gazelle intense for a few months and then take a break.

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