Who Should I Pay First?

Adam — Thu, 25 Jun 2009 13:00:51 +0000

This is a guest post from Trisha Wagner. Trisha is a freelance writer for DepositAccounts.com, where you can compare rates of checking accounts from dozens of banks in one place. Trisha writes regularly on the topics of personal finance and savings accounts.

If you are like the rest of the nation, there comes a time when there are more hands out than money to go around. This has become evident during recent months as more people struggle to stay afloat in tough economic times. When times get rough, everyone suffers and it becomes very important to determine where your boundaries lie when it comes to money. Does this mean you have to pick and choose who gets paid? Well to be brutally honest, yes, you will have to decide the best use of your money if you find that you no longer have enough to go around. Now I’m not suggesting you pick and choose which bills you pay (unless you are really facing a financial hardship) but rather which businesses, companies and individual’s will benefit from your hard earned cash. Here are a few tips to help ensure your money is put to the best use:

Family Comes First

You know the saying, “blood is thicker than water” and for most families this theory still applies. If you have been forced to rein in your spending, your first priority must be the health and welfare of your family. This may mean that your generous nature with friends, co-workers or anyone else in need (charities included) might have to take a back seat when it comes to money. If you traditionally pick up the tab for lunch or other outings you will have to consider if this extra spending will have a negative impact on your household budget. As selfish as it sounds, when money is short you must make yourself and those who depend on you the first priority.

Cut Frivolous Spending

The great restaurant down the road or the nail shop you frequent once a week surely need your money, but no more than you do. Now is the time to tweak your budget to exclude spending that is anything but necessary.

Paying Off Debt

We all know how dangerous debt can be to a budget and overall financial security. Wherever possible, throw extra money toward debt repayments to accelerate paying off your debts. This is especially important today, as creditors continue to increase the standards for loaning money as well as the penalties for those who carry large balances.

Continue Investing in Your Future

If you budget allows, you should continue to contribute as much as possible toward your future needs. This includes retirement, education expenses and emergency funds. The recent recession has hopefully taught many American consumers a much needed lesson. The need to have money set aside for unexpected or even expected expenses is vital to avoid facing a situation where you have to rely on borrowing money via a loan or use of a credit card. Staying out of debt is the easiest way to avoid financial trouble in the future.

It is unfortunate that people must face difficult decisions regarding where to spend their money during tough times, however it is a situation that cannot be avoided. For individuals facing a financial hardship, the options become fewer making it more difficult to decide where your limited amount of money will go. By focusing on your financial obligations, the safety and security of your family and future you should be able to see your way through these tough economic times.

Who Should I Pay First?

Avoid Payday Lenders Like the Plague

Adam — Sat, 12 Jul 2008 16:20:00 +0000

Payday loans are one of the worst, if not the worst way to help yourself get out of financial trouble. As the name suggests a payday lender advances you money that is based on your paycheck. Basically, you write a check to the lender for a certain amount plus a fee. You typically write this check in advance so that when the cash it, you will have just received your paycheck and it will not bounce. These types of loans typically carry very high interest rates with them. For example, if your paycheck is typically $1000 every two weeks and you need to borrow money now, the payday lender may ask you to write them a check for $1000 dated in two weeks and then they will give you $800. The other $200 is a fee or interest rate. This is a whopping 586% for the two weeks!

Typically, most payday lenders encourage people to keep ‘rolling over’ their loans from week to week. They set up the loans so that they are difficult to pay off and force the borrower to ‘rollover’ the loan with more fees and interest charges. These types of payday lenders were a big problem for the military in the past few years. For example in Oceanside, California (where Marine base Camp Pendleton is) there are 22 payday lenders. That is 17 more than there should be based on the population of the city. These types of lenders prey on the innocent and those who may not know better financially. They prey on the military because most of those individuals are very young and inexperienced with money and therefore may not know better. Payday lenders are also prominant in minority neighborhoods throughout the United States.

Here is a great video with a former payday lending manager. She talks about how they took advantage of people and some of the tricks of the trade.

Have any of you or your relatives had experience with payday lenders?

Avoid Payday Lenders Like the Plague

Money Relationship » Borrowing

Who Should I Pay First?

Avoid Payday Lenders Like the Plague