Pay Day Loan Confession: I've fallen and I can't get up!

…have you (or someone you know) "fallen" into the Pay Day Loan bottomless pit of debt and feel like you can't "get up" out of it? I have.

When you’re in a bind and you need a few hundred bucks to bridge you over a few days until your next pay day, a pay day loan may look very appealing. In my opinion ... Pay Day Loans are like an addictive drug. The first experience may seem helpful and pleasurable but it eventually becomes something that you believe you can’t live without.  And just like a drug addiction, getting out of Pay Day Loan debt can be scary, daunting and financially painful. But … there is a cure for this Financial Dis-Ease. 

   

Let’s first discuss how Pay Day Loans causes Financial STDs (Substantially Tremendous Debt).  Ok … (true story) … a family member of mine needed $200 to pay the electric company to keep the lights on. A so-called friend referred them to a local pay day lender. The pay day lender charged $20 per $100 borrowed. The process was so pleasant and easy that they decided to borrow an extra $100 for a total of $300.  They paid their past due electric bill for $200 and had $100 for food and gas until their next pay day. On their next pay day, they made the fateful decision to renew the pay day loan. So, this time the loan was for $360 (to pay off the original loan amount of $300 loan and the $60 fee). The new fee was another $72, which totaled $432 for the new loan. My family member renewed this pay day loan at least 5 or more times and quickly began to sink into debt.

   

Getting “up” out of pay day loan debt is not as easy as falling “down” into it, but it is possible. Here are 3 tips to get out of Pay Day Loan Debt.

   

COLD TURKEY

   

If at all possible, the best method is to stop taking out pay day loans immediately and sacrifice for the pay period. This will reset your financial situation and give you your full pay check during your next pay check.  It is important to plan for this pay check deficiency. To help you through this financial deficiency,

• Ask your family members if they some money to spare or borrow,

• Contact your bank or credit union to see if you qualify for a payment deferment on your loan payment due to financial hardship,

• Cut out eating out during this pay period to save a few bucks, or

• Carpool with a co-worker or take public transportation to save on gas.

DEBT TREATMENT

   

Another option is to apply for a loan with a reasonable interest rate and short period of time (term) to pay off the pay day loan. So instead of having a pay a lump sum every month, you can paythe new loan off in more reasonable and smaller weekly, biweekly or monthly payments.  If you go this route, make sure you keep the term at 12 months or less and make sure that the interest rate does not exceed 18%. Some credit unions may offer loan programs designed to help people get out of pay day loan debt.  One of the advantages of getting a loan from credit unions is that they must comply with a “usury law,” which means that they cannot exceed a specific interest rate, usually 18%.  If you have a great relationship with your bank, ask them if they have a loan consolidation program that can assist you with refinancing your pay day loan.

   

  

TERMINATION

  

A last resort to get out of pay day loan debt may be bankruptcy. The two chapters available to file under for bankruptcy are Chapter 13 or Chapter 7.

   

Chapter 13 bankruptcy is considered “reorganization” and is appropriate if you have significant collateral that you want to keep like a home or vehicle. Chapter 13 establishes a payment plan up to 5 years to pay on your debt based on your financial capacity.  Once you have completed all of the payments ordered in the bankruptcy plan, the debt is considered “discharged” and the remaining debt is not collectible by the creditor.

   

Chapter 7 bankruptcy is considered “liquidation” and is appropriate if you have significant unsecured debt and minimum or no collateralize debt.  Chapter 7 liquidates or “terminates” qualified unsecured debt. Should you have collateralized debt, you can “reaffirm” with the bank and continue to make payments according to your credit agreement or you can “surrender” the collateral to the bank or trustee so it can be sold to pay on the debt to liquidate.

   

This option again should be a last resort consideration but can assist you in resetting your financial situation with a fresh start.  There are pros and cons to filing for bankruptcy so make sure that you consult with a knowledgeable and consumer focused bankruptcy attorney.  Click here to listen to my interview with Bankruptcy Trustee & Attorney, Angelyn Wright, Esq., as she talks about the “Truth About Bankruptcy.”

   

   

Sinking in Pay Day Loan debt can feel helpless and hopeless, but there is financial resurrection. The great thing is that you hold the power in stopping this type of financial abuse by making the decision to stop using pay day loans.  Make the decision today.

   

Of course, the best way to avoid "falling" into this bottomless pit of debt is to avoid using it at all costs. Seek alternative short term loans through your bank or credit union.

  

  

Financially True,

  

Tarra Jackson ... Making Money Sexy

   

  

P.S.  The 3 tips above is a start to help you get up from falling down into this type of debt, but there are other ways as well.  What are some other tips to "get up" from falling into pay day loan debt bottomless pit?

3 Ways to Stop Financial Self-Sabotage

… have you (or someone you know) committed Financial Self-Sabotage? I have.

   

Yeah I know what you’re thinking … “Financial Self-Sabotage?”  Yes many of us have a very dysfunctional relationship with our finances. Whether it is a fear of commitment or wanting to avoid getting into another financially abusive relationship; many people execute financial self-sabotage. Financial self-sabotage is being aware of what you are doing; knowing it is not beneficial to your financial well-being, situation or your financial goals; yet you still do it anyway.  Don't fret!  Most of us do it every now and then. Here are 3 Ways to Stop Financial  Self-Sabotaging.

  

STOP BREAKING YOUR BUDGET'S HEART

Even though budgets are living and breathing documents and may change, they help us keep financial promises to creditors, other bills, and more importantly to ourselves and our financial future through savings. Every time we break our budget, we position ourselves to break a financial promise, which may negatively affect our financial goals.
  

When I realize and acknowledge that I am breaking my budget frequently,

• I  re-evaluate my budget to make sure it is "S.M.A.R.T." (Simple, Manageable, Accurate, Repetitive with Times of all due dates).
• I may also reassess my Financial Goals to make sure they are "S.M.A.R.T." (Specific, Meaningful, Attainable, Reasonable & Time-driven) as well. 

  

PLAN FOR FINANCIAL SLIP UPS

Confession ... I am an Emotional Spender. (Look out for my Blog: Emotional Spender Confession: I am an Emotional Spender and Why it's OK!). I rebel against anyone or anything that tries to cage me in (I'm an Aquarius, go figure). I have also realized and admitted that I financially self-sabotage during a specific time of the month when I feel unusually emotional. Ladies, you may understand. Men, don't judge.
  

So, I set aside extra money in my "Slip Up Money Jar" to use when I need a little retail therapy through emotional spending. I don't justify it, I just plan and allocate for it.
  

If you are like me regarding this, include your Emotional Spending Sprees in your budget so that you don't use money that is allocated to something more important like, giving, saving or paying your bills. Just remember, being Financially Promiscuous requires Financial Contraception (Budget).  Again, plan and proceed with caution.

  

STOP PLAYIN' YOURSELF

Ok, here’s the thing … if we don’t know the rules of the financial Game, we're going to get Played. Many years ago, I used to lose the financial game because I didn't understand how my money and credit management behaviors financially affected me. As I matured and grew in the financial services industry, I realized that I was playing Checkers when the financial institutions were playing Chess and losing was EXPENSIVE. I was financially self-sabotaging myself because I didn't take the time to learn the rules of the financial game by reading the Disclosures thoroughly and completely.  My reality check was that "they weren't cheating me ... I just didn't take the time to learn the rules of the financial game." That was why I was getting played. 
  

So because I was (and still am) a sore loser, I learned the rules of the financial game by reading the Disclosures very carefully before I opened an account or signed for a loan, product or service. 
  

Some examples of disclosures you should you read and understand are:

• Truth In Savings Disclosure
• Truth In Lending Disclosure & Loan Agreement
• Fee Schedule
• Credit Card Disclosure & Shumer Box

 
Although I Financially Self-Sabotaged myself, I was eventually able to identify it, acknowledge it and fix it. The great thing is that now, when I start doing things that are counter-intuitive to what I need and want to accomplish financially, I am able to choose to make better financial decisions to stop financial self-sabotaging myself.
 
 
Financially True,
      

Tarra Jackson ... Making Money Sexy

How to Qualify for Student Loan Forgiveness

To most, loans are the only solution to pay their tuition fees and complete education. Student loans also help students pay for books and living expenses while schooling. Even though these loans are refunded at low interest rates, they can be a burden depending on the job, salary, or how fiscally savvy an individual is.



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If you find yourself forced to live below your means or struggling to pay bills, applying for loan forgiveness will ease the financial encumbrance. Not everyone qualifies for loan forgiveness but most public servants do. Public Service Loan Forgiveness (PSLF) can be a thank you gift to public servants for dedicating their time and energy serving their country.

Organizations that offer student loan forgiveness

The following are not the only organizations that will offer loan forgiveness. Therefore, it's wise to consult with your employer, or carry out research online to find if your profession qualifies for loan forgiveness.

• The Association of Medical Colleges

• The American Federation of Teachers

• Providers of Intervention Services for Disabled Students 

• Peace Corps Financial Benefit and Loan Deferment

• Nursing Education Loan Repayment Program (NELRP)

• National Health Services Corp

• Head Start Staff Student Loan Forgiveness Program

• College Cost Reduction and Access Act

• Child Care Provider Loan Forgiveness

• Armed Forces Student Loan Forgiveness Programs

• Americorps

• American Bar Association

According to the AES, “loan forgiveness programs encourage students to pursue an education that will lead to employment in specific occupations.” Loan forgiveness programs focus towards forgiving all or part of the loan as long as the borrower fulfills specific professional requirements.  The government also uses loan forgiveness to increase personnel in areas that lack enough. An example is nursing shortage in the U.S.

The programs are only applicable to students who secured loans through the government. Such loans include Federal Ford Loan, Federal Stafford Loan, Federal Consolidation Loans, and Federal PLUS Loan. However, you qualify for Public Service Loan Forgiveness only if you have already made 120 payments under any of the programs while still employed although they don’t have to be concurrent.

To qualify for Indian Health Service Loan Repayment Program, health professionals should sign a two-year contract with an Indian health program. The program offers up to $48,000 coverage on student loans.

The Child Care Provider Loan Forgiveness Program will cover 20% of a borrower’s loan after serving two years, 20% for the next three years, and 30% onwards. To qualify, one must have served in a childcare facility and hold an early childhood education bachelor's or associate degree.
 
For vets, the Veterinary Medicine Loan Repayment Program (VMLRP) can offer up to $25,000 yearly. For approval, one has to serve in the National Institute of Food and Agriculture (NIFA).

Nursing Education Loan Repayment Program helps qualified nurses pay up to 60% of their education loan balance. The catch is they have to commit to a two-year contract and get 25% for a third year.

 More information on Public Service Loan Forgiveness (PSLF) is available at studentaid.ed.gov.

By Eileen Eva