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Thread: In debt and not sure how to get out.

  1. #1
    can't post; too scared Anonymous's Avatar
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    Default In debt and not sure how to get out.

    I've used payday loans for a while now and for the most part have been able to keep it under control... at least until recently. My roommate moved away and I've been living on my own for a bit now(I'm in my very early 20s). I'm currently about 2600 dollars in debt with pay day loans, bills, and a credit card(which is 1000 of the total). I'm struggling to find ways to pay off loans and then find myself having to re-loan in order to pay of other loans/bills which keeps me in a vicious cycle.

    It started because I was stupid, basically. I took out four pay day loans and kept thinking that I still had another person to help me with half the rent/food/etc. when I didn't. I could pay off the 2600 in about 2 months, but I with rent, food and bills adding up it just seems to... stay the same. I pay back 500, then have to re-loan 400 to make rent, then have to pay back another 500.

    2600 isn't too bad, at least that's what I got from reading online about some debts... but a couple of the pay day loan places always try and take the money from my bank, which results in NSF fees which just digs my hole deeper.

    I'm wondering how I should go about slowly repaying and getting out of this hole? I considered holding off on the payday loans, paying my essentials such as rent/food/bills and then picking away at them without having to re-loan? It would take a bit longer though and money would be tight, but it seems to me that paying off entire payday loans only to have to re-loan pretty much the same amount will just keep me where I am.

    Any advice is helpful, even if you call me an idiot for getting into this situation in the first place. I just need to be able to get a paycheck and not have to worry about how I'm going to buy enough food for two weeks.

  2. #2
    Strangle Hazard thank mr skeltal's Avatar
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    As you mentioned, yes you are an idiot for getting in this position in the first place, but if everyone was a financial wizard than payday loan companies wouldn't be in business.
    You have figured out that payday loans are quite predatory and scammy, they are set up to leave you in near perpetual debt. First order of business is to get the payday loan guys out of your life for good - if you can sell something to come up with the money (garage sale?) I'd say that'd be your first choice of action. Secondly, if you credit isn't completely shot, try to get a personal loan from a bank. Even a secured loan against your car or something would be better than playing the payday loan game. Use the loan to pay off the payday folks completely and then make regular non-predatory payments back to the bank. Upshot of this is it would help build your credit too, by making on-time payments to a legit lender that reports to the credit bureaus.

    Bright side, you're in your early 20s, and $2600 bucks sounds like a lot but really unless you have student loans up the wazoo or are in some kind of stupid car payment or home mortgage situation which might compound your problem, this is relatively a walk in the park compared to a lot of people in a financial tizzy. You're young, and it's summer time - great time to make money. Get a moonlight job delivering pizzas or advertise lawn mowing or odd jobs or whatever, you can make an extra $2600 in a couple or three months no problem if you work hard for it.

    If you have any more questions or more details about your situation feel free to post here, or PM me if you want - I am an accountant in real life and while I don't do personal finance stuff as part of my professional job, it's a bit of a hobby of mine so I know a good deal about it. I'd be happy to chat with you more to get a gameplan together and keep your identity anonymous of course.

    Number #1 priority for you right now is to not take a dollar more in payday loans, pay them off as fast as you can and get that shit out of your life and never go back there again. That's just bad juju that nobody should have in their life, as you have noticed by the NSF fees and other side effects like probably not sleeping well at night. You can get through this though, in a pretty short amount of time, with a game plan and some elbow grease, so don't worry too much - this is easily within the realm of reality in terms of getting through it.

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    H8 herbraham's Avatar
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    dept can be avoided.

    look at it this way. you will help your credit score if you can beat this.

    otherwise there is always bankruptcy.

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    Mega Bore Atomic's Avatar
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    Just as Rick says you need to stop doing the payday loans. They are a legal way to steal money from poor people. Honestly you'd be better off borrowing the 2600 from a loan shark than to do another payday loan. Not really but you get the point. Let's say you do the loan for 100 bucks and the fees are 25. If you did it just one time it wouldn't be that big of a deal. But they are set up so that it's an endless loop. After the first one you are just giving the company 25 bucks every two weeks for nothing. It should be number one priority that you never do it again.

    It's going to be hard (That's what she said) but you need to get a savings account and actually put some in it for hard times. You never know when, like last week for me, that you're computer gives up the ghost or any number of other things that you need or want.

    Another thing is that people want to get out of debt but no one wants to sacrifice what the want to get it. In other words, it's going to be hard but you're going to have to cut out the fun stuff and get serious. Got a netflix account? Drop it. Expensive dinners? Eat leftovers. Gym membership? Do some exercising at home.

    You get the idea. It's hard, I've been there and with a lot of work and strategically placed raises and promotions it got fixed. Luckily I've never had a credit card to rack up the bills. I had the loans with various companies that racked up around 12K which put me into a live check to check situation coupled with a payday loan loop. You can do it.

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    Strangle Hazard thank mr skeltal's Avatar
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    Quote Originally Posted by herbraham View Post
    otherwise there is always bankruptcy.
    $2600 in debt or file bankruptcy and pay at LEAST that in legal bills, go through that stress and ruin your credit for nearly a decade? That would be the dumbest move in the history of personal finance.

    Any update OP? I know we chatted a couple times over PM, how are things shaping up for you? Do you have a gameplay you're following and/ or written budget in place? Is it getting easier to stick to over time?

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