Today’s tip is very simple: avoid payday loans.
A payday loan is a short term loan. For example, you need to pay your rent today, but you don’t get paid until next Friday. The payday lender lends you the money to pay your rent today, and you pay them from your paycheque next Friday. Great.
The problem is that if you borrow $500 today, you may end up paying back $600 next week. That may only seem like $100, but $100 per week over the course of a year, on a $500 loan, is over 1,000% interest! You can’t afford it, so don’t do it.
You would be better off borrowing from friends or family. Or, even better, talk to your landlord and explain that you can’t pay the rent until next Friday. They won’t be happy, but they probably won’t charge you 1,000% interest either.
Then, make a personal budget so you can set aside the money you need for rent next month, which should keep you off the debt treadmill.