Getting Out Of A Rat Race
How people get into difficulty
With so many companies offering loans these days, its easier than ever before to take on too much. It can be easy to get the things you want – furniture, electronics etc – now when there is finance on offer, especially when the weekly payments seem so small. It is common for card companies to entice customers with interest free periods when first getting a card, which seems fine, until the interest payments start getting added, and it becomes impossible to pay the debt off as well as financing everyday living in future. The problem is that many people have been taking on too many of these types of finance at once without adding up the total, and needing emergency finance such as payday loans. The problem comes from the fact that the payments will come in at different times of the month, and are often due before payday, so payday loans provide some short term relief. However, when payday comes, the payday loans have to be paid back, and by then there can be a whole new stack of requests – which might be for essentials such as energy, phone or rent and mortgages. This can mean exceeding the overdraft, which incurs heavy daily charges. In some cases, it might then mean that you need to defer the payday loans for another month, which continues the cycle further.
What can be done
A good starting point can be marking on a calendar the dates and amounts of all payments that are due – this can be a painful exercise, but remember the problem isn't going to get any worse unless you let it! Having a grasp of all the payment dates, and your pay date can help you work out if, and when, you might have to start looking to payday loans, and if and when you could pay one back.
If your debt is more serious, there are drastic options available, such as bankruptcy or an Independent Voluntary Arrangement, which are legal measures that can mean essentially that you don't have to pay all of your debts off, but will seriously affect your ability to get finance (other than payday loans) in future. There are commercial options, such as consolidation loans, which are basically one big loan that pays for all of your other loans. The monthly payment can be calculated to be less than all of your previous payments, but you'll end up making the payments for a longer period, and they often work out much more expensive in the long run. If you're disciplined and are likely to be accepted, an ordinary personal loan can provide you with the money to meet payments if you're finding you need payday loans regularly. The danger here is that you might end up spending the money on other things, whereas payday loans are normally settled the following month.
