There are legitimate ways to stop payday loans and cancel or pay less, depending on your specific situation. Here are some options to consider:
Negotiate with the lender: You can try to negotiate with the lender to work out a payment plan that is more manageable for you. Explain your financial situation and offer to make smaller payments over a longer period of time.
Consider debt settlement: Debt settlement involves negotiating with the lender to settle your debt for less than the full amount owed. This option can be risky and may impact your credit score, but it can provide relief if you’re struggling to repay your payday loans.
Talk to a Debt Pro: Consider talking to Damon Day about your situation. He’s a talented debt coach that gives people custom plans and solutions based on individual circumstances.
Seek credit counseling: Credit counseling can provide education and guidance on budgeting, debt management, and financial planning. A credit counselor can work with you to develop a plan to repay your debts, including payday loans, and provide support and resources along the way.
File for bankruptcy: Bankruptcy can provide legal protection from creditors and may allow you to discharge or reorganize your debts, including payday loans. However, it’s a serious decision with long-lasting consequences and should be considered only after all other options have been exhausted.
It’s important to note that there is no one-size-fits-all solution for payday loan debt, and the best approach will depend on your individual circumstances. Consider consulting with Damon Day or other debt solution providers to help you evaluate your options and determine the best course of action for your situation.
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
One popular way people pay off debt is to use the equity in their homes. Home equity loans and home equity lines of credit (HELOCs) let borrowers use their homes as collateral in exchange for financing. Just be sure to factor in the risks if you’re considering this option. The lender can seize your home if you can’t make the payments.
Who this is best for: Borrowers who have built up equity in their homes.
Who this is not good for: Those unsure of their ability to maintain the monthly payments.
Home equity loan versus debt consolidation loan: Home equity loans and HELOCs may offer lower rates than debt consolidation loans, though they come with more risks, since your home is used as collateral.
Debt relief services
Debt relief services, including debt settlement companies, offer another way to deal with your debt if you can’t qualify for a consolidation loan. These companies reach out to creditors and debt collectors on your behalf and try to settle the debt for a lesser amount.
If you decide to pursue debt relief services (perhaps as an alternative to bankruptcy), be aware that the fees these companies charge can be steep. Take your time to fully research fees, reviews and other details before applying. It’s also wise to compare multiple debt relief companies before you commit.
Who this is best for: Borrowers who are experiencing financial hardship and cannot pay their debt.
Who this is not good for: Those with a thin credit history or less-than-stellar credit score.
Debt relief services versus debt consolidation loan: Unlike debt consolidation loans, debt relief services aim to eliminate some of your debt without you having to pay it. With that said, pursuing debt relief is a risky move, and it can damage your credit score.
Credit counseling
Another option that can help you get debt under control is credit counseling. Credit counseling companies are often (though not always) nonprofit organizations. In addition to debt counseling, these companies may offer a service known as a debt management plan, or DMP.
With a DMP, you make a single payment to a credit counseling company, which then divides that payment among your creditors. The company negotiates lower interest rates and fees on your behalf to lower your monthly debt obligation and help you pay the debts off faster.
DMPs are rarely free, though, even if they’re done by a nonprofit credit counseling service. You may have to pay a setup fee of $30 to $50, plus a monthly fee (often $20 to $75) to the credit counseling company for managing your DMP over a three- to five-year term.
Who this is best for: Borrowers who need help structuring their debt payments.
Who this is not good for: Those with little wiggle room in the budget.
Credit counseling versus debt consolidation loan:With a debt consolidation loan, you’re in control of your payoff plan, and you can often apply with few fees. With credit counseling, a third party manages your payments while charging setup fees.
Balance transfer credit card
With a balance transfer card, you shift your credit card debt to a new credit card with a 0 percent introductory rate. The goal with a balance transfer card is to pay off the balance before the introductory rate expires so that you save money on interest. When you calculate potential savings, make sure you factor in balance transfer fees.
Keep in mind that paying off existing credit card debt with a balance transfer to another credit card isn’t likely to lower your credit utilization ratio like a debt consolidation loan would.
A debt consolidation loan is also going to offer higher borrowing limits, enabling you to pay off more debt, as well as fixed monthly payments, which make it easier to budget and stay disciplined with paying off debt.
Who this is best for: Borrowers who can pay off existing debt quickly.
Who this is not good for: People with a young credit history or a less-than-average score.
Balance transfer credit card versus debt consolidation loan: Balance transfer cards are often the best choice for borrowers who have the means to pay off their debt within 18 months, which is a standard 0 percent APR period. If you need longer to pay off your debt, or if you have a lot of debt, a debt consolidation loan is a better choice.
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It’s a question that many people have on their minds as they begin to seriously consider their finances: how do I raise my credit score, or how do I fix my credit? Though credit scores may seem shrouded in mystery – how they’re calculated, which ones are used – consumer credit scores tend to follow a few common principles.
In this post, we’re explaining some simple tricks to raise your credit score.
Raising your credit score can take time. After all, credit scores are a measure of how trustworthy of a borrower you’ve been over the years. The good news? You can get started on these credit tips today.
Let’s start with the basics of how to improve your credit score.
How to raise your credit score
Raising your credit score is important, but you might not have a solid idea of what exactly your credit score is. Don’t worry; it’s not as complicated as you might think.
Your credit score is basically a measure of how reliably you pay back money that you’ve borrowed.
There are two main models that credit reporting bureaus use to measure your credit:
FICO
VantageScore
The three bureaus that do the reporting are:
Experian
Equifax
Transunion
Each of these bureaus receives information from various financial institutions you’re involved with, and that information is what determines your credit score.
You’ll generally have a better score if you’ve:
Consistently paid off loans.
Kept your credit usage low.
Stayed on top of all your financial responsibilities.
Both metrics range from 300 to 850, with most scores above 700 considered good to great. If your score is below that — or significantly below that — it can be difficult obtaining a loan at a good rate, or even obtain a loan at all.
Here’s what you can do to boost your score if you do find yourself with a lower rating than you’d like.
1. Ask for (and receive) a credit limit increase
If you’ve been regularly making required payments on your credit card, you may want to try asking the credit card company for a credit limit increase.
What to consider before moving forward:
You wouldn’t necessarily want to do this to finance a purchase you otherwise wouldn’t have been able to make.
But if your monthly balance is relatively steady, you could decrease your utilization rate (a good thing) by increasing your credit limit.
For those who may not know, the credit utilization rate is the amount of credit available to you that you’re actually using. It’s basically your balance divided by your credit limit.So, if you increase your credit limit and keep the balance the same, the utilization rate will be lower. And that can translate into how to improve your credit score.
2. Pay your bills on time
One simple way to get started building solid credit is to start paying bills on time. Among the many different sources of data that major credit reporting bureaus use to assess your creditworthiness, whether you pay for regular expenses on time is pretty important.
It’s not hard to see why: if you have a good track record regularly making rent payments, that probably means it’s more likely that you’ll be able to make regular payments on a loan.
The trick, however, is that you may need to connect your bank account to one of the credit reporting agencies’ services. If you’re curious, call or visit the website for Experian, Transunion, or Equifax to see whether you can have your regular bill payments factored into each of these bureau’s tabulation of your score.
*Pro-tip: if you have a hard time managing your bills:
Make a central list where you itemize each bill you have — rent, water, gas, electric, internet — and what day each one is meant to be paid.
Or, even easier, just download the Mint app, which can remind you about upcoming bills and keep track of the money you spend on bills each month.
3. Show you can handle different kinds of debt
It’s probably not a good idea to run out and take on additional debt for the sake of it, but if you’re in need of a type of loan you haven’t used before (say, an auto loan for a new car, or a personal loan to consolidate credit card debt) consider taking it on and make regular payments on it; you may see a bump in your score.
Lenders want to see you can handle different types of debt, so adding another type of loan and paying it down could have a positive effect on your score.
Here’s an example. If you’ve been paying down student loans (generally, these fall into the “installment loan” category) but don’t yet have a credit card (generally, these fall into the “revolving credit” category), you could see a score increase just by opening that credit card account and paying off your balance regularly.
4. Open a new account and make on-time payments
If you need additional credit, opening a new account and handling it responsibly (making on-time payments on it, not borrowing more than you can afford) can have the effect of increasing your score.
Remember, though, that opening a new account you can’t handle (where you miss payments and/or take on more debt than you can afford) will likely have the opposite effect: a score decrease. So, it’s a good idea to proceed responsibly.
How to keep your credit score high
Once you’ve got your credit score near where you want it, it’s important to do your best to keep it in good standing. By keeping up the habits listed above, you can ensure that your credit stays relatively stable. However, it’s good to note that, in some cases, credit can fluctuate.
Don’t be surprised if you see your credit score dip, then raise up again from time to time.
For example, maybe one month, you use a higher amount of your credit utilization due to a few unforeseen expenses. This isn’t the end of the world, and with continued responsible debt management and credit usage, your score should recover.
In general, however, here’s what you can do to maintain a high credit score once you’ve got it.
1. Close accounts with care and caution
“I have too many credit cards” is something you may have heard someone say or even thought to yourself. And for many, that may be the truth. But having several credit cards, in and of itself, won’t necessarily lower your score.
Though closing credit card accounts or doing a balance transfer may seem like it would boost your credit score because it’s simplifying your life or making things more organized, it can sometimes have the opposite effect. That’s because when you close an account, two things happen:
You lose the entire line of credit you had, which may decrease your utilization rate (see the 1st tip above).
You’ll stop having that account continue factoring into the average age of your accounts.
Typically, scores want to see you’ve held several accounts open and in good standing for a long period of time.
Here’s a big caveat, though: there are still plenty of good reasons to close accounts, credit cards or otherwise:
Maybe you can’t afford the annual fee or the rewards just don’t make it worth it anymore.
Or maybe you’re struggling with credit card debt and want to consolidate it into a personal loan.
The important thing to remember is this: if there’s no good reason to close an account, it’s sometimes wiser to keep it open.
If you do want to close an account, however, don’t worry; the ding to your credit will likely be minor, and it’s likely to recover with time after continued responsible use of the other lines of credit you do still have open.
If you’re considering moving your balance, shop balance transfer credit card deals and personal loan offers from our partners.
2. Stay on top of your personal finances with Mint
Your credit score isjust one metric that helps you measure your personal finances.
You should also keep tabs on other important aspects of your financial well-being, including:
Healthy credit
Well-kept budget.
Solid debt-to-income ratio
Steadily growing savings
Mint allows you to do that. By aggregating your financial information — including everything from investments to upcoming bills — into one convenient dashboard, you can have a bird’s-eye view of your financial health.
Knowing when rent, bill payments, credit card payments, and loan payments are due each month can help you raise your credit score and stay on top of it while also knowing how much you have leftover to budget for other areas.
Remember, there’s no one magic bullet to build your credit score fast. The above credit tips are just some of the ways you might raise your credit score over time and keep it high. However, lasting, meaningful score increases come from showing consistently strong credit habits.
In other words, don’t forget the fundamentals: pay your bills on time, don’t take on more debt than you can afford and be careful about applying for too many accounts over a short period of time.
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Aaron Hahn vividly remembers the moment he decided to crush his debt.
It happened in March, while visiting his retired aunt and uncle in Arizona.
Their home, with a lush, sprawling golf course as its backdrop, symbolized to him the power of hard work and consistent savings. Not to mention, this was their vacation home, a place where his “snowbird” aunt and uncle enjoyed visiting during the winter months.
“It was my ‘aha’ moment,” says Hahn, who, at the time, had about $42,000 in debt spread across student loans, a car loan and credit cards. “I was like, ‘O.M.G. I want this life.’ I want to do what they’re doing. I want to be financially independent.”
Hahn had also just celebrated his 34th birthday, which served as another wake-up call. “It was a confluence of events…I realized that I just wasn’t taking care of money like I should be, like a grown-ass man,” says Hahn. “I feel like there’s an awakening when you’re in your 30’s.”
His first plan of attack: Obliterate his $11,000 in credit card debt. For Hahn, credit was just a tool to for buying stuff when you didn’t have the cash. “The credit card debt was just something I was misusing,” he admits. “It became another part of my spending arsenal. I used credit for more spending power.”
Since March Hahn, who works in the Navy, has embarked on a diligent plan to reach debt zero across his four credit cards. Using a free personal loan calculator, he’s given himself 12 months to eliminate all balances and has, for the first time ever, begun budgeting. He’s using Mint to stay on track.
Will Hahn cross the finish line in time? I thought it would be interesting (and fun?) to check in from time to time to report on his progress and setbacks. He says he likes having me as an accountability partner.
Here’s how Hahn’s staying focused and handling some setbacks in the first few months.
“Budgeting is Like Yoga”
Hahn’s Mint budget is his first true budget. “It is a behavioral modification. It’s like doing yoga for the first time. There’s pain and discomfort,” he laughs.
To make room for the roughly $900 a month debt payments, he’s had to make some big trade-offs. The greatest challenge has been cutting back on restaurant meals and outings with his girlfriend. “I though you needed to go out and have dates in order for there to be a connection,” Hahn says. “Instead, we’re spending more time at home and realizing that it’s ok. I have her support in that.”
His girlfriend is also helpful in planning and cooking their meals at home. “She makes enough so I have lunch the next day.” This alone, saves him $70 per week, Hahn estimates.
The “Wall of Shame”
While Hahn has a total of $42,000 in debt, he’s zeroing in on the credit card balances first using the snowball method and attacking the card with the greatest interest rate first. All the while, he’s stopped using plastic and sticking to a cash-only diet.
For motivation, he uses visual reminders. “I’ve printed a list of all the individual balances on my fridge. It’s my ‘wall of shame’ and I’m looking forward to crossing them off,” says Hahn.
Simultaneously Saving
It’s been a slow process, but Hahn is also working towards a three to six-month emergency reserve. “That was what my credit cards had been.” So far he’s managed to tuck away $1,000. “I just love the idea that, for the first time in my adult life, I saved $1,000 and didn’t spend it. It’s such a good feeling.” Once the debt’s paid off, he plans to make savings a higher priority and add more to the account.
An “Actual” Emergency
It’s a good thing that he started saving because in May, Hahn emailed me to say that his debt payoff plan had suffered a minor setback. But it was for an important cause: healing his cat.
He wrote: “One of our emergency funds just came in handy. The day after I (quite literally) cut up my credit cards, our cat, Yasmin, became very sick over the weekend, requiring a visit to an emergency veterinary clinic. Between buying a new pet carrier and the vet expenses, this was $550 that neither of us had planned.
Fortunately, Andrea (my partner) has an emergency stash of her own, and between the two of us, we were able to handle this curveball with relative ease. Yasmin is okay (we have a follow-up appointment in two weeks), and we’ve used this event to reinforce just how crucial it is for both of us to set aside significant, liquid savings.
As for my debt repayment plan, this will weaken my attack for the month of May, as I want to stash an additional $500 into an emergency fund for when we run into another inevitable hurdle.”
Following that email, Hahn wrote about another surprise: A bigger car maintenance bill than anticipated.
All said, between the vet and car maintenance costs, he had to fork over $800 in unplanned expenses.
“This is definitely going to slow my debt repayment down by a month. Not very thrilled about this. Feel a bit defeated, honestly,” Hahn wrote.
Still, none of that $800 got charged to a credit card. So, in my book that’s #progress.
How will Hahn fare over the summer months? Will he find a way to get back on track?
Stay tuned to the Mint Blog for more updates on his debt payoff plan.
Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at [email protected] (please note “Mint Blog” in the subject line).
Farnoosh Torabi is America’s leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, she’s become our favorite go-to money expert and friend.
Save more, spend smarter, and make your money go further
Save more, spend smarter, and make your money go further
The summer’s been a trying season for our friend Aaron who’s determined to erase $11,000 worth of debt over 12 months.
He is now nearly six months into his plan and says the path has been harder than he could have ever imagined. I wrote earlier that he’s also trying to simultaneously build up his cash reserves, which makes it even more difficult to avoid using his credit cards when unforeseen expenses pop up. Between his cat’s medical emergency and a rise in car maintenance costs, Aaron estimates that he is about $700 off his original debt pay off pace. He’s hoping to play some catch up in the coming months.
Here’s an overview of how Aaron’s trying to plow ahead.
A Failsafe Plan
Aaron’s cut up all of his credit cards, except for one…which he’s deactivated and given to his girlfriend to avoid using it in a pinch. “It’s our double-failsafe way of having it if we need it, but we definitely do not want to use it,” he says.
Knowing that the holidays are an easy time to rack up credit card debt, Aaron’s also begun to save in a separate fund for those anticipated costs such as gifts and travel. The goal is to not use credit at all this year. “We have about $450 in that holiday fund so far. We have a goal of $800,” he says.
Moving to San Diego
Some more surprising (and costly) news for Aaron, who works for the Navy: He will be relocated to San Diego starting next year. This will mean a rent increase from where he currently lives. It’s all adding pressure to his current plan to save more.
He has stopped his Thrift Savings Plan contributions temporarily while devoting more to debt payments and building his emergency fund.
“I give myself a C+ for my first few months. It’s tough to stay disciplined, but staying below my Mint budget threshold has made eyeballing my finances a lot easier,” he says.
Stay tuned to the Mint Blog for more updates on his debt payoff plan.
Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at [email protected] (please note “Mint Blog” in the subject line).
Farnoosh Torabi is America’s leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, she’s become our favorite go-to money expert and friend.
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While not all healthcare providers will report unpaid debt to credit bureaus, medical debt that ends up on your credit report could damage your credit score in the long run. That said, there’s a little sigh of relief for consumers where medical debt reporting is concerned.
In a process that started in July 2022, the three major credit bureaus, TransUnion, Experian, and Equifax, introduced the first stage of changes to medical debt reporting. This included extending the time period before unpaid medical collections appear on credit reports from six months to one year.
Additionally, paid medical bills are no longer included in credit reports, meaning they will not impact credit scores.
Further, with effect from April, 2023, medical debt for consumers who initially owed less than $500 has been removed from consumer credit reports.
These changes will benefit you in the following ways:
Time to Renegotiate the Bill with the Hospital
If a medical bill was initially reported but is later removed from your credit report, you have a full year which you can use to renegotiate, dispute, or work up payment plan with the hospital or healthcare provider before the bill can be re-added to the credit report.
This eases the strain and stress of debt payment, consequently, reducing the chances of getting a low credit score.
Opportunity to Consolidate Multiple Medical Bills
There are various ways to consolidate your medical debts. For example, you can pay it off with a zero-interest credit card and then pay off the credit card balance over time. Many credit cards offer promotional periods with zero interest rates for a certain period of time, typically between 12 to 18 months.
Other ways to consolidate your medical debts include taking a personal loan, taking a home equity loan, and enrolling for a debt management program.
How Changes in Medical Debt Reporting Impact Credit Scores
For starters, a longer grace period increases your chances of preventing your medical debt from ending up on credit reports.
Initially, like all other debt, paid medical debt would still reflect on your credit report for seven years. With negative information on your credit report, your credit scores continue taking a hit.
The removal of paid medical debts and the exemption of debts of $500 and below from credit reporting, therefore, gives your credit scores a great boost.
There are significant benefits of higher credit scores:
Better Loan Terms
Lenders view consumers with low credit scores as high-risk and will likely either turn you down or offer less favorable loan terms. Higher credit scores can provide you with greater financial flexibility and potentially save you money on interest charges. This is because lenders see you as a responsible borrower, making you more likely to be approved for loans, mortgages, and car leases.
You may also get lower interest rates, longer repayment periods, or larger loan amounts.
Increase in the Pool of Credit Cards you Can Qualify
A higher credit score can increase your chances of qualifying for credit cards with better terms. Credit card issuers use credit scores to work out your creditworthiness, and with a higher score, you may qualify for credit cards with better rewards programs, favorable interest rates, and higher credit limits.
Having a wider range of credit card options could allow you to choose a card that better fits your spending habits and financial goals. That said, it’s important to use credit cards responsibly and to avoid taking on too much debt, which could harm your credit score in the long run.
The Take Away
No one plans to have a medical debt, as it may come as an emergency. However, even with insurance coverage, not all expenses may be fully covered. This can put pressure on your finances in addition to your health. The changes in medical debt credit reporting is predicted to help more than 70% of consumers to not only have more time to manage their medical debt but also do the same with the least negative impact on their credit health.
Finally, it is advisable to regularly check your credit report to ascertain the implementation of the changes.
When Minnesota resident Sherry Shannon was short on cash after her car broke down in 2013, she turned to a storefront payday lender for a $140 loan. She remembers the process as quick and easy — she signed on the dotted line, got the cash and was out the door within minutes.
But when it came time to repay, the combination of her monthly bills, plus the triple-digit interest rate on her payday loan, meant she was short on cash again, so she took out another loan.
As the amount she owed ballooned, Shannon says she soon felt trapped by her debt.
“I experienced homelessness once, and I didn’t want to be homeless again, so I had to keep taking [payday loans] out just to pay my rent and my light bill,” she says. “I didn’t see any way out of this.”
Shannon’s story doesn’t stand alone. Payday lenders operate in 32 states, and about 12 million Americans use payday loans each year, according to research from the Pew Charitable Trusts. Though these loans may be advertised as a way to cover a one-time emergency cash shortage, borrowers often use them for important recurring expenses such as rent and utilities, and the cost can be exorbitant.
If you’re trying to get out of payday debt, there are ways to break the cycle, especially if you know where to turn in your community.
How payday loans work
Payday loans are short-term, small-dollar loans typically capped at $500. They’re considered high-interest because of their fee structure.
A typical two-week $100 payday loan comes with $15 in fees — which equates to an annual percentage rate of 391% — according to the Consumer Financial Protection Bureau. For context, financial experts consider 36% the maximum APR a loan can have to be affordable.
Because payday loans are relatively easy to get, they can also feel like a surefire solution to an urgent financial problem, says Anne Leland Clark, executive director of Exodus Lending, a nonprofit based in St. Paul, Minnesota, that helps families break out of predatory loan debt. But when people can’t repay, their financial situation becomes more precarious.
“Payday loans may provide immediate relief in a financial crisis or a financial trauma, but then it almost retraumatizes you,” Clark says. “It causes more stress, and people fall into a cycle where they aren’t able to catch up.”
The payday loan debt cycle
A debt cycle is when repeat borrowing leads to an ever-increasing debt that may demand even more borrowing to manage it.
According to 2014 research from the CFPB, four out of every five payday loans are reborrowed after the initial two-week term. The CFPB’s research also shows that most borrowers end up owing more in fees than the original loan amount.
That was the case with Shannon. Though her initial loan was $140, she eventually paid $500 in fees while making little progress in paying down her principal loan amount.
The quick turnaround time on payday loans is part of why they’re so hard to repay, says Clark. Chances are, if you’re short on cash when you borrow, you’ll still be short on cash two weeks later when you have to repay the loan in one lump sum plus the interest you owe.
If borrowers can’t repay, they may be able to renew the loan depending on their state. However, renewals require an additional fee, making it that much harder to catch up when the loan comes due again.
“Even when people feel like they’re making progress, they’re not actually paying down their loans,” says Yasmin Farahi, deputy director of state policy and senior policy counsel at the Center for Responsible Lending in Durham, North Carolina. “That’s how the cycle continues. They’re paying some amount, but it’s not enough to get them out from under this.”
Clark and Farahi emphasize that borrowers shouldn’t feel ashamed for being stuck in a payday loan debt cycle. Though consumer finance education can help, they say greater regulatory efforts are needed to address the issue truly.
“It’s important for consumers to understand that this is really a policy problem,” Farahi says. “It’s up to policymakers to ensure that we’re getting rid of these kinds of loan sharks, not up to consumers to learn how to swim with the sharks.”
Breaking free of payday loan debt
Shannon eventually found her way to Exodus, which offered her a zero-interest, 12-month loan to refinance her payday debt.
She’s now free of payday loans but wants others to know how easy it is to become trapped. Though Shannon admits it’s hard to do, she says the key is reaching out for help before the loan gets out of control.
If you’re struggling with payday loans, consumer advocates strongly recommend exploring the options below to help you pay off the debt.
Research organizations in your area that offer financial assistance
Your city or state should have organizations that provide financial assistance to community members in need. Look for nonprofits, charities and religious groups. Some organizations may specifically address payday debt, like Exodus does in Minnesota, while others may offer general financial assistance to help cover necessities, such as rent or groceries. Use the money you save on those expenses to pay off your payday debt.
Reach out to a nonprofit credit counseling agency
Credit counseling agencies specialize in helping people with their finances, including getting out of debt. Credit counselors can work with you to create a budget, manage your bills and explore your debt payment options, including a debt management plan. With a debt management plan, you pay the credit counseling organization, which then pays off your creditors and may charge you a fee.
Take out a small-dollar loan from a credit union or bank
More credit unions and banks are offering small-dollar loans. These loans could help you pay off payday debt and be left with a more affordable loan instead.
Your neighborhood credit union is a great place to start. Though you’ll need to become a member before applying for a loan, membership is easy and affordable at most credit unions. Some federal credit unions also offer small loans, including payday alternative loans or PALs. These loans can range from $200 to $1,000 and cap borrowing costs to keep the loan affordable. You’ll need to be a credit union member for one month before applying. However, some credit unions offer a second type of PAL that allows you to apply immediately and has higher loan amounts.
Banks are also increasing their small-dollar lending, though you’ll need an existing account in good standing to apply. Even if your account isn’t in good standing, it doesn’t hurt to call the bank, explain your situation and see if they’re willing to offer you a loan.
Borrow money from a family member or friend
If you’re unable to get help from an organization or financial institution, don’t be afraid to tap your network. It can be hard to ask a family member or friend for money. Still, you can make it more comfortable by writing down mutually agreed-upon loan terms — including when and how you’ll pay them back and if you’ll pay interest — so the expectations are clear.
Many people find themselves in financial trouble at one point or another, so remember that getting back on your feet means you may be able to help someone else in the future.
I never thought I’d be days away from becoming a homeowner just one year after our move out of Austin, Texas. Last November, we decided to move to Houston, Texas in hopes of better jobs with higher salaries. We had struggled for years, yet always somehow managed to stay above the water in the financial
The post How We Got Out of Debt and Purchased Our First Home appeared first on MintLife Blog.
What would financial success look like for you? Certainly, everyone has a different definition. For me, it’s not about having more money than I know what to do with. It’s about making wise decisions with the money that I have. It’s not all about pinching pennies, although, there is a place for managing expenses and […]
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