The Ugly Payday Loan

Why is it that these payday loan places are littered outside every front gate? I just have to vent a little today. I just had an internet payday loan company want to advertise on my blog. I politely declined, but I wanted to say "Are you out of your mind?!!!" I am wondering if people realize, when they go to a place like this, they are paying over 500% interest on a short term loan!!! You can get a better rate from your neighborhood loan shark for God's sakes. With that being said, there are some things you can do NOW to keep yourself from ever walking into such a place again. I promise.

Before you even get started, looking at your bank and credit card statements, you need to sit down and reflect on yourself...and your spouse if you have one. Women are intuitive, and if you listen to yourself, you will know what your true situation is. We usually know before any guy would...that we have backed ourselves into a corner. Ask yourself:

• Are you living beyond your means? Do you have more going out than coming in?

• Did you have a big setback or a series of setbacks that caused you to slip and literally, fall down?

• How is your self-esteem? Do you feel good about yourself? Are you proud of yourself and your husband and what you have accomplished?

• Do you envy your neighbors? Do you find yourself buying things because they have them? Back in the day, were you the one to have the first thing on the block?

• Do you have someone you want to impress?

• Do you feel like you just can't get a break and why me?

If you have one or more of these feelings....bingo...it's time for you to come out swinging. The best way to get out of it, is to take responsibility for yourself. I know that sounds harsh. I admit it...as Americans, and I do it too...we tend to want to blame someone else for everything that goes wrong in our lives. Many of us never learned how to go about with our finances. Why don't they teach us this stuff in high school? It's just not fair!

Do you know what I found out? It is nowhere written that life itself, is supposed to be fair. It just isn't. Ask anyone of faith, and they'll tell you that straight up. So now what? Well, after you've taken personal responsibility for the things you have done...I say YOU have done, because even if there were outside forces, such as an illness or broken refrigerator or a series of events causing us to spend so much money....if we had been prepared...it would've only been a small blip on our radar screen of life.

Here are some ideas to get you started:

• Start tracking what money goes out every month. If you are not computer savvy, then get a little notebook. Carry it with you. Just take the time to write down EVERYTHING you spend. The hardest thing to keep track of is the cash. All those trips to the money machine. I do it too sometimes when I get lazy...I don't like to keep track where I hand it out! Put each expense into a category such as food, housing and transportation.
  

• Compare that amount with what is coming in. Technically, we should be saving 10% (and some even say 15%) of our take home pay for retirement. We want to put that money in a tax-free environment...the best bet would be your 401k at work (some companies match what you put in up to 6%) or a Roth IRA or a Thrift Savings Plan (if you are a government employee). If you have kids, you should be setting some aside for college AFTER you get your retirement needs set aside every month. The rest, should all be divvied out into housing, food, utilities, clothing, entertainment, etc. After you add everything up, you should be able to see if you have more going out than what is coming in.
  

• Along those lines, you're going to need a budget. Budget is such an ugly word, but before you stop reading, know that a budget is a guideline for you and is not set in stone. It just gives you an idea of about how much you should be spending in each area of your life. You will even have a category for "blow money for me". Find out how to set one up. If you don't like the word budget, you can always take your retirement money and your kids' college money off the top...and then blow the rest of your paycheck. I've tried that too...but I tend to save more with a budget...I LOVE games and it turns into a game of how much more I can shave off every month.
  

• Start setting some money aside for an emergency or rainy day fund. Your eventual goal is 6-12 months of income, but $1000 to start off is great! Put $20 or $50 or whatever you can afford after your basic necessities to this goal each month. Never again be pushed into a corner when your car breaks down or you need to get your furnace fixed. Have the money ahead of time, and sometimes you can even negotiate a lower cash price. This will also allow you to raise the deductibles on your car insurance, saving you a few more hundred dollars per year. Keep this money in an easy to access account. We have ours in a bank money market account, earning about 5%. You can even write checks from such an account...perfect for emergencies.
  

• Start tackling your debt. Part of your budget will be tackling your debt. Once you pay your basic food, roof over your head, transportation and basic clothing, the rest should go to paying off debt. This is even BEFORE you invest a dime. It makes no sense to invest at 12% if your credit card debt is costing you 17%. Pay it off first, then invest. Dave Ramsey says you can subsist on variations of "beans and rice" and "rice and beans" while you are doing this. Get it done so it is not hanging over your head the rest of your life. Use the snowball effect to decide how much and when to send money to creditors. You may want to tackle a bit of your smaller debt first, not the high interest credit like many experts recommend, just to get yourself motivated to go on. That's the hardest part. I highly recommend Dave Ramsey's money makeover plan.

• Learn about compound interest. Every one of us, regardless of our income can EASILY become a millionaire by retirement, you included. We only have to set aside a small amount of money every month to do this and invest it.. Your muffin and coffee money alone could grow to over a million! The best way to do this is to sock it away tax-free and let it grow. Those choices include your 401k at work, Roth IRAs (max it every year) or your Thrift Savings Plan.

• If you don't have the money for something you really want, stop and think first. Do you need it or want it? If it's just a want, set aside the money every month and once you have it, most times, the item is cheaper AND you can whip out your cash and negotiate a lower price to begin with. Cash allows you to be in charge! There is never one of just anything (unless you are into antiques and such, but even then, if you are patient, it'll come around again).

What do you do in your life to maintain control of your finances? How do you control spending and saving? I'd love to hear your ideas.