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Happy holidays to all our subscribers!

In the “old days”, before the days of instant gratification caused by credit cards, people only bought things they could afford. Being able to afford something meant paying cash for it. If a person didn’t have the cash to purchase it, they didn’t get it – or if it was something they really wanted, they saved for it.

The availability of credit cards and in-store credit has made instant gratification the norm for most people. This is also one the reasons that so many people have bad credit. Once you get into the habit of, “ I want it, I’ll charge it”, it becomes even harder to say no. Sometimes, this can lead to some very serious problems.

Most of us understand the value of good credit. Our credit score has become one of the most important numbers in our lives. Credit scores can be used to determine if we are eligible for many things, such as home loans, vehicle loans, leasing an apartment, our insurance rates, and in some cases, if we are eligible for a job.

Many people in America constantly walk a tight wire – one misstep and down they go! And, when you credit goes down, so does your good name. Suddenly, the world sees you as a person who does not stand behind his/her word, a person who is not trustworthy. So, how do you avoid this trap? Simple – before you make that purchase, ask yourself these questions:

1.Do I really NEED it now? Not want – but need? There is a difference.
2.Is this purchase necessary or can I put if off a couple of weeks and save for it?
3.Is my current budget too tight to add another toy? (TV, stereo, motorcycle, video game, a toy is anything that is not a necessity for daily living)
4.If I wait a while, will the prices go down? Do I really have to have something new the minute it becomes available? (New video games, new toys, etc.)
5.Will my child survive if he/she doesn’t get the newest toys for Christmas, when the prices are inflated?
6.Will my vehicle hold up for another year? Do I really need a new car every two years?

These are the basic questions you should ask yourself before pulling out that credit card and making another purchase. The key to maintaining a manageable balance in your budget is this – Think before you buy! If you walk into a store and see a new “toy” that you just have to have, sleep on it. Chances are, you may not need it as much as you thought you did the day before.

We have all heard the saying, “If it sounds too good to be true, it probably is!” Many people often forget this during the stress of an emergency. Everyone has emergencies – and most of us have run into a situation where we could use a few extra dollars to get us to the next payday.

But, are payday loans the way to go? The advertisements make these loans seem simple and painless. “Get $1500 until your next payday – Instant approval!” “Apply online and get money instantly!” Sounds pretty easy, doesn’t it? And, the people who often need it the most are the people these loans hurt the most.

Getting a payday loan is a pretty simple process and approval is granted quickly. Credit is not an issue – the only requirement is a job. But, where these types of loans hurt is when it is time to pay them back. Oh, did the ad forget to mention the interest rate? Of course it did!

Sometimes the annual interest rate can exceed 200%! Yes – you heard correctly. As a matter of fact, the most common interest rate for payday loans is $25 interest per $100 borrowed. The annual interest rate for this loan is 650%. The loan doesn’t sound so simple now, does it?

Another thing to keep in mind if you are considering a payday loan is this. The loan is for a maximum two-week period – which means the loan must be paid in full two weeks from the date of the loan. In many cases, the loan can be paid in full and a new loan taken out immediately. So, if you have a loan for $400 with an interest of $25/$100, this means that you are paying fees of $100 every two weeks to keep the loan going. That’s $200 per month in interest fees!

Imagine what would happen if you had been saving $200 per month prior to your emergency and had established an emergency fund ahead of time. Payday loans are readily available, and are relatively easy to get – the hard part if getting them paid back. And, this is where something as simple as borrowing a couple of hundred dollars to get you through until your next payday can turn into a real nightmare!

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