I don’t think anyone would voluntarily get a payday loan if they had a choice, but many don’t. It’s a tough ask to settle a payday loan without some extra income.
It’s easy credit with relatively few lending criteria and targets those who need credit the most.
Payday loans may be marketed as helping those who need it, but they are predatory and should be banned rather than controlled.
But that’s just my opinion.
If you find yourself relying on payday loans and are stuck in the borrowing cycle, this post is for you.
I share some simple, actionable tips to settle a payday loan faster and attempt to help you escape the debt cycle.
Settling a payday loan
I’ve been there myself, trying to stretch every penny, so I know how tough it is. I also know it can be impossible to see a way out of the cycle and that’s what these tips are for.
Even if you can’t use them all, you should be able to see that there is a way out…
Here are 8 practical ways you can save money to repay that payday loan, even when you’re on a tight budget:
- Track your spending: Keep a record of every single expense, no matter how small. This can help you spot areas where you can cut back.
- Cook at home: Eating out, takeaways and ready meals can add up quickly. Try cooking your meals at home from fresh ingredients – it’s usually cheaper and healthier. Look for simple and budget-friendly recipes online.
- Make your lunch: If you’re working or studying, making your own lunch can save a surprising amount. Preparing sandwiches, salads, or leftovers from dinner can be a lifesaver for your wallet.
- Cut down on unnecessary subscriptions: Look at your subscription services – do you really need them all? Consider cancelling those you rarely use. It could be streaming services, magazines, or any other recurring expenses.
- Energy saving tips: Small changes at home can lead to big savings on your energy bills. Turn off lights when you leave a room, unplug chargers when not in use, and consider using energy-efficient bulbs. Finally, heat the person, not the home to save on heating.
- Shop smart: Look out for sales, discounts, and coupons when shopping for groceries or other essentials. Compare prices and consider buying in bulk when you can.
- Reduce transport costs: If possible, use public transport or carshare instead of driving alone. Walking or cycling for short distances can save money and keep you active.
- Sell unwanted items: Have a clear-out and sell items you no longer need or use online through platforms like eBay or Gumtree. The extra cash can go directly towards your loan repayment.
It might not feel like you’re making massive changes at first. But over time, these small adjustments can add up and help you chip away at your payday loan.
Once you settle the payday loan, you can keep these habits going to build a healthier financial future!
How to break the borrowing cycle
Breaking the debt cycle is a crucial step toward living a better life. It won’t be easy, but nothing in life worth having is.
Once you break the cycle, you can hopefully say goodbye to payday loans forever and view the future a little more optimistically.
Here are some tips to help break the borrowing cycle:
- Face reality: The first step is usually the toughest and it will be the same here. Acknowledge your debt and understand that it’s okay to ask for help. Many of us go through tough times, and seeking assistance is a sign of strength, not weakness.
- Assess the situation: List all your debts, including payday loans and credit cards. Note down the amounts, interest rates, and due dates. This helps you see the full picture.
- Create a budget: Make a list of your monthly income and all your necessary expenses, like rent, bills, and groceries. See what’s left – this is what you can work with to pay off your debt.
- Prioritize payments: Focus on high-interest debts first, like payday loans or credit cards with high rates. Make at least the minimum payments on all debts to avoid penalties.
- Negotiate with lenders: Contact your lenders and explain your situation. They might be open to adjusting your repayment plan or offering a temporary freeze on interest to help you catch up.
- Emergency fund: Start building a small emergency fund, even if it’s just a little bit each month. This can help avoid needing payday loans when unexpected expenses pop up.
- Cut unnecessary spending: Review your budget for areas where you can cut back. It might be eating out less, cancelling unused subscriptions, or finding cheaper alternatives.
- Side hustles: If possible, consider taking on part-time or freelance work. The extra income can go directly toward paying off your debts faster.
- Snowball or avalanche method: Two strategies here: Snowball – pay off the smallest debt first for a psychological boost. Avalanche – tackle the highest-interest debt first to save more money in the long run.
- Seek financial advice: Free services like Citizens Advice or StepChange can provide expert advice tailored to your situation. They can help you come up with a solid plan.
- Stay positive: Breaking the debt cycle takes time. Celebrate each small victory along the way. You’re taking control of your financial future!
- Avoid new debt: Once you start making progress, avoid taking on new debt. It’s all about building a stable foundation for your finances.
Remember, it’s a journey, not a race.
Breaking the debt cycle takes commitment and patience, but with each step you take, you’re getting closer to financial freedom. You’ve got this!
