The following is a guest post by Adrienne Carlson
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I earn a comfortable living, but even so, I find it hard to be a spendthrift. It may be a souvenir of the days when I had to get by on a shoestring budget or the fact that my parents were never big spenders at any point of their lives, but I have always been careful with my hard-earned money and resisted the urge to splurge on things I do not need. But then, even with this kind of conservative behavior, I ran into a mini financial crisis a month ago – I had put most of my money into investments that I could not touch for the next three years. My bank balance had just enough to get me through the month, but since I was expecting a windfall (an inheritance from a great uncle) in a fortnight or so, I was not too worried.
But then, as fate is often wont to do, it played a cruel trick on me – the ATM machine I regularly use acted up and refused to cough up any money. Cursing my luck, I made my way back home only to discover that troubles don’t come alone – my account had been debited $900 (there were three aborted attempts to draw money). Now I had hardly any money and was in danger of overdrawing my account. A visit to the bank and a complaint to the manager resulted in a lot of words that were meant to soothe ruffled feathers, but when they told me that I would get my money back only after a month (yes, a whole month), I was at a loss as to what to do – you see, I did have money, but I was unable to touch it.
My first task was to arrange for enough money so I could see the month through, but I did not want to take out a loan in order to do that. So I did the next best thing – arranged for a soft loan. If you are ever in such a situation where you need money to tide you over in an emergency or until your next paycheck comes through, here’s what you could do:
* See if you can get a soft loan: I borrowed some money from my dad, an amount that I could repay without interest a month or so later. Look for friends and relatives who are willing and can afford to help you.
* Get by with what you have: If you can grit your teeth and get by with what you have, it’s the best thing you could do.
* Make money by selling stuff you no longer use: While not a long term solution, it does help you get rid of clutter and also make money out of stuff you no longer use or need.
* Consider a payday loan: If you’re really desperate, take out a payday loan but watch out for the interest rate in order to avoid a heart attack when the bills come in.
This guest article was written by Adrienne Carlson, who regularly writes on the topic of accredited online universities. Adrienne welcomes your comments and questions at her email address: adrienne.carlson83@yahoo.com
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I have a problem with two of these. First, I would try to stay away from borrowing from friends or family. I had to do that once and I will never do it again. It completely changes the relationship until the money is paid back and most of the time, the money never gets paid back.
Unless you live in a state where payday loans are highly regulated (very few states do this), the interest rates on payday loans are astronomical (100 to 400% annually).
If you really need cash, look to your local credit union. Many times they have lower rates and are willing to work with you because they are a community bank. I know a lot of people who have gotten short term loans from a credit union and were very happy with it.
These are pretty decent tips, but I like Klingtocash's idea of going to a local credit union. I have never personally done this, but it sounds like a pretty good alternative to the four choices you give.
-DC
Pay-day loans!!! Are you crazy, don't you watch tv?( TIL DEBT DO US PART).
Most of those poor smucks got into deep water with loans that 'would tide them over until payday'
Pay-day loans are just plain a bad idea and in no way thrifty.
The best advice is an impromtu garage sale.
Just pull all your junk out and get rid of it for pennies on the dollar ...its tax-free. It is surprising what people will buy if priced right.
Then when the bank pays you back, eventually, you can consider it found money.
@Klingtocash
Those dynamics do change, you are correct about that - If I "loan out" money to family or friends I NEVER expect it back - I always consider it a gift and if I do get it back - a pleasant surprise.
@David@DINKS Finance
The credit union is a good place to start and many of them, if membership is needed, only need $25 to open an account.
@Anon
Taking on a payday loan is never an easy decision, I have personally done it a few times to get through after my bankruptcy when I didn't have other alternatives.
However, that being said, payday loans ARE like playing with fire but can be worked with if one is very careful.
I do like your idea of an impromtu garage sales for a few more dollars - just clean the home out and have less worries about a loan
nice blog, will visit again
As Hemmingway said, "Hunger is good discipline and you learn from it." I'd do everything I could to make it through the month except take out a payday loan. Then I'd switch banks once I had my money returned since it was the bank's screw-up that put you in this position to begin with.
@the biz of life
I love that quote!