Stopping the Payday Loan Trap

Stopping the Payday Loan TrapIt’s so easy to get caught up in it, but stopping the payday loan trap is vital for your financial future. It may seem like you’re in a cycle that will simply keep perpetuating itself, but there is a way out of it, you just have to formulate a plan, and then stick to it.

The trap is set the payday lender by offering you cash in your hour of need. They know that you will toss rationality aside when you are in a perceived or real emergency. With your defenses down they offer you more money than you are able to payback on your next payday, and still make it through to the following payday. They’re hoping that you will decide to come back again to take out another loan, and that’s where they make their real money.

Once you get into the habit of re-loaning, in your mind it just makes sense to keep it going. It seems there’s always something that pops up that needs your financial attention and makes it so you can’t pay the loan off and stay afloat another two weeks. But like any habit, the payday loan cycle can be broken. And we’ve got the answer for you in the following guide.

Is Stopping the Payday Loan Trap Possible?

Yes, it is possible, and recognizing that you’re in a trap is the first step to getting out of it. So congratulate yourself, because many of the people that are stuck don’t even know it, and the ones that do just accept their fate. By wanting out you are showing that you are sick of watching your money go up in smoke every month.

Now that you’ve resolved yourself to get out of it here’s what you do: Almost every payday lender out there has a graduated chart of how much you can take out, usually in $50 or $100 increments. Rather than take out the same amount each time, take out a loan that is one degree lower than the one you took out last time. This is where $50 is much better. So if you took out a $600 loan, take one out for $550. It may not seem like much of a difference, but that’s the point. You can figure out how to live off of $50 less over two weeks, but it is pretty hard to go cold turkey off of a payday loan.

Over the next few months, keep following this system. You’ll soon have it down to $300 or less. At that time you can start to play with the idea of not re-loaning. Try going as long as you can without re-loaning and see if you can make it. If you need to take out the money, keep doing it for $50 less each time. When you get it down to $200 or less you should be able to give it one final push and you’ll be out.

This way you don’t reduce your lifestyle too much, you won’t be eating ramen noodles for two weeks trying to survive so you don’t have to re-loan. $50 or even $100 is just a few dollars a day spread out over two weeks, so you should barely notice the difference, and it shouldn’t make or break you. If it does, you’re in bigger trouble than you thought, and we’re praying for you.

This method has been proven effective time and time again. As an ex-employee of a payday lender I saw dozens of people try this, and then never saw them again. On the contrary, I saw hundreds of people try to go cold turkey and swear up and down that I would never see them again, and sure enough they were back two weeks later with a sheepish look on their face and ready for another loan – for the same amount.

The other method that people try that fails more often than it succeeds is to use a big influx of cash to pay it off, typically a tax refund. The reason this doesn’t work is that if you’re not good with money management, you probably end up spending that big chunk of cash several different ways in your mind, before you even receive it. When it comes in, you’ve already promised it to so many people and places that it’s quickly gone, and your loan remains. Or you pay you loan off with it, and then need to re-loan to pay for all the other stuff you mentally spent it on.

Go with the weaning system outlined above and you will soon have payday loans in your rear view mirror.

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