If you had a set of rules to follow when contemplating applying for a payday loan or a new line of credit, would you follow them? What if the rules kept you from obtaining the much needed money? How dedicated could you be to adhering to your own set of financial rules? Think about the following items when your next money emergency is crying out for relief.
Do you need a payday loan or a new line of credit?
- Did you stick to your budget? Why do you have this money emergency? If you can comb through your budgeted allotments and find that you followed them all yet still cannot afford to take care of unexpected cost, you will want to reevaluate the budget plan and set new objectives. If you follow the plan to prevent future emergencies, you may not have to follow the rest.
- Were credit cards used smartly? Maxed out balances will steer you towards online payday loan lenders. Keep credit charges to a minimal and pay off the balance every month as best as you can. Carrying the extra debt over to the next month will only give you more debt. Pay attention to your interest rates and keep extra charges away as best as possible.
- Apply for new credit or short-term loan ONLY in when nothing else will work. New credit applications will affect credit scored even if the application is denied. Short-term loans are not free. Consider the cost effectiveness of your options in regards to the emergency.
- Don’t neglect your debt. The bills may be stacked high and you may not want to deal with the debt, but don’t think it will go away on its own. Small financial troubles will snowball into disasters pretty quickly. Analyze your budget’s effectiveness and don’t be afraid to ask for help.
- Keep your debt real. Know your credit score and a best estimate of what you owe. Review your credit often to protect yourself from any false reports or identity theft. Closing accounts will not boost your rating; in fact it will do the exact opposite. It is important to understand credit utilization ratios and the power you have over them.
- On-time payments are under your control. The easiest way to mess up your credit is to make a late payment. Besides the extra cost in late fees, that ding on your credit does not look good to other creditors. The best way to maintain and improve your credit is by paying your bills on time month after month. When a creditor does do a hard inquiry to your report, they will see a long history of well managed accounts.
- If you can’t afford to pay it with cash at the time of purchase or when the statement is due, don’t do it. Save your third-party money for emergencies which have no flexibility.
- Build yourself a savings account. It’s the best emergency money out there. You will not have to worry about maxed credit cards or finding a payday loan lender to service your financial needs.