A PEW’s study found that 81% of people who use cash advances or payday loans do so because they can. The deciding factor is not income, credit score, or credit worthiness. People choose to use a short-term loan so they don’t have to give up something else. Who needs to cut back on eating out or watching movies when a cash advance online is so readily available? People with a different vision towards finances than my own make those choices.
81% of cash advances are unnecessary
The cost of a cash advance will do more than bring you fast money towards an emergency. It will provide a way out of having to give up something else. There are many people who do have other money avenues but just don’t use them.
- Go to a friend or relative. Everybody has gone through some sort of budget hiccup at some point. Often times, a cash advance is just a bridge to the next paycheck. If you have a friend or relative who can loan the money instead of the direct lender, the bridge is much cheaper in construction: no fees, no interest, and no-fax cash. The key to this loan is the non-monetary price paid if the loan goes bad. If you know you won’t have the money to repay the loan come next payday, skip this step and try another option. Relationships are too priceless to be ruined over a few hundred dollars or less.
- Do you have any item to pawn? A pawn shop will take your property as collateral in exchange for money based on the resale value. You have 30 days to return the money in order to get your property back. After the 30 days, the property is placed for sale and you can often times have the pawnshop hold it for you, but the price will now reflect the value. Pawnshops are not a good option for someone who may not be able to get their property back in 30 days. On a positive note, these loans do give twice the amount of time as cash advances to come up with the full payment.
- Hold a garage sale. If your garage or closet looks anything like mine, I can hold a garage sale every weekend for quite a while. Most people would give their “stuff” away. Hold a garage sale and earn some money. The investment is spending time on weekend mornings. You have nothing to lose since you would normally throw or give away the stuff away anyway. Depending on what you have stored, you could make a few hundred dollars in just one weekend. The down side to garage sales is that anything with real value will not bring in a fair price. People look for steals and deals during garage sales. Higher priced items should be sold on an online auction, but that takes more time.
- Cut Expenses. Talk about inconvenient. Make my own coffee and lunch everyday? We can surely joke about a few dollars here and a few dollars there. But in actuality, these expenses add up to quite a bit each month. I try to tell myself that I can go without many things for a time period. I would not have to give up them forever, but when it comes to cutting back or getting a cash advance, I would gladly trim my expenses in order to protect my next paycheck.
What would you do if push comes to shove and you need a few hundred dollars to make it through until payday? A cash advance is an option, but it is not always the best one.