3 Ways To Stop Being “Desperate But Not Serious” About Avoiding Bad Financial Choices

Living from paycheck to paycheck?  Had a major expense recently but not enough funds to cover it?  Are you frequently overdrawn at the bank?  Being desperate for cash can turn you into a victim.  Here are three things to do to avoid letting desperation keep you broke.
 
EVEN IF YOU ARE DESPERATE DON’T GET PAYDAY LOANS
Deferred presentment agreements, or as we all know them, payday loans, have become the modern day loan sharks.  Typically, the agreement requires you to write a check to the business to hold and, in exchange, the company loans you amount of the check for a short time then they deposit the check to pay themselves back for the loan. The problem is, if you have to renew the loans, the company will charge you an astronomical interest rate just for holding your check.  Recently, I saw a contract from a local Montgomery, Alabama payday lender that charged the customer 425.83% interest!  The customer signed the contract because he was desperate for the money to pay his power bill.  Remember, desperation is never a good reason to sign a contract.
 
SIT ON THE FLOOR TO AVOID RENT-TO-OWN CONTRACTS
Ok, let’s say you need a sofa but you don’t have the $600 to buy one from the quality furniture store.  Then let’s say someone told you they had a couch that was not made well but they will let you rent it for a year for $200 a month.  If we do a little simple math, we can see that in three months’ time, you have paid enough for the low quality sofa to have purchased the new sofa outright.
That’s not the worst part, however.  You are still stuck with the sofa you are renting for another year.  Would you rather pay $2400 for a low quality sofa or $600 for a high quality sofa?  Save the money you would pay the rent-to-own company and sit on the floor until you have the money to purchase a good sofa for cash.
 
MAKE SMALL CHOICES TO SAVE BIG MONEY
The number one way to avoid predatory lenders is to not be desperate for money in the first place.  Desperation is expensive.  When you don’t have savings to fall back on, your desperation can cause you to enter into some really abusive contracts.  Don’t let it happen.  If you have even a small nest egg, you can avoid being a victim of your desperation.  Start now to cut back on those things you don’t really need and put the money you save in a savings account. Here is an example.
Recently, my husband and I made the decision to cancel cable and keep the internet.  We invested in a $30 Leaf HD antenna for our local Montgomery news and weather (in HD, no less!) and use Netflix for movies.  In a year’s time we will be saving $840.  If you had that much in savings, chances are you would never have to go to a predatory lender.