Let’s face it. The economy is bad. Really bad. Prior to the economy bottoming out, people were living the high life…or so they thought. Losing a job or your house is very common today. Which is sad. Because people didn’t know how to handle their finances, they turn to find relief from anywhere. Some turn to payday loans as a temporary fix to a lifestyle problem. However, there are some alternatives, like Wonga, to the high interest payday loans.
If you can avoid loans of any kind, that would be ideal. However, if you are going to take a loan out AVOID Payday Loans! These companies give you an advance on your paycheck, but charge anywhere from 400-600% interest on the money you borrow. If you start using one of these companies, you begin a downward spiral of debt and misery. When you constantly borrow money against money you don’t have, you’ll end up owning more than you can ever earn. Interest compounds and these companies are unforgiving of debt owed to them.
Payday Loan Alternatives
I had not heard of this option until recently. Apparently banks are offering a way to get a quick, temporary loan at a much lower interest rate. The normal route for a bank loan (ie car, mortgage, etc) is to fill out a lot of paperwork and then wait for approval. This alternative offers a quick online application and then the money is deposited into your account. The interest rate is still around 20%, but that is much better than 500%!
The Best Option
The best option is to completely get rid of debt so you don’t find yourself going anywhere to borrow money. When you are borrowing money to pay for borrowed money, it’s probably time to look into a different lifestyle. Changing your spending habits is not easy. Getting out of debt is not easy. But if you can find a way to live a life where you can live on what you make, you will really know the meaning of freedom!
Ethan Matthews is a staff writer for My Debt Free Road.