The following is a guest post.
There are four things that can drive me crazy when my checking account is running low and there are things to buy or pay for but, obviously, I can’t:
• Paying penalties on late payments of bills is a HUGE waste of money
• Dealing with the mental stress of being late
• Not being able to buy something important
• Knowing that I have earned the money, but don’t have it yet
So there are times when getting a payday loan can solve one or several of these things. You should note that payday loans come with a price. You are borrowing money from yourself, in a way, but the lender is helping you do that. Cash advance companies generally charge an upfront fee and interest. The idea is to repay on the loan in your next paycheck. But if you need two or more pay periods to pay back on the payday loan, the costs will increase.
Given that cost, you still can come out ahead. First, calculate the costs of paying late on one or two bills – what you would have to pay if you didn’t get the cash advance on your paycheck. If you know paying late will send a ding to your credit report, add another $100 or $200 to the cost of not getting the payday loan. Credit ratings drops can be a serious loss.
Or, if you have a pending purchase – which can include a car maintenance check up, or something else that is essential and will need to be paid for somewhere down the line –will it cost more later if you have to make that purchase on an emergency basis?
Finally, factor in the cost of stress. This can include the anxiety from not being able to pay for something, even though you know you’ve pretty much earned it already but that your paycheck won’t arrive for another week or two.
If you run the numbers and truly account for the cost of stress, the payday loan might make a lot of sense.
