Posts Tagged ‘manage your payday loan debts’

How To Create Emergency Savings Fund To Manage Your Payday Loan Debts?

No matter which method you are using to manage your payday loan debts, you must first break the cycle of payday loans. You will have to make sure that you do not get trapped into a situation where you may have to borrow another cash advance in future. A proven way to do this efficiently is by creating and maintaining an emergency savings fund. Having such a fund will always keep you out of unnecessary debt and will also help you keep your necessary debt manageable. Whether you opt for a traditional savings account or any other method, make sure the account allows you to withdraw money at very short notice so that you can easily get the money as and when you need it. Regardless of the method you are using to create and maintain a savings fund account, you are advised to implement the following ideas.

How Much Saving Is Enough?

The emergency fund that you have created to manage your payday loan debts must maintain a certain amount of deposit balance every time; the general rule of thumb is to save at least 3 months’ salary. You must plan your monthly contributions toward this account accordingly.

Have An Efficient Budget Plan In Place

You will obviously need a budget plan that should tell you how you have to manage your income and expenses in a way that should allow you to pay off your debts faster while still leaving you with enough money to maintain a decent emergency savings fund. Always remember, the basic idea of budgeting is to save as much money as practically possible. Depending upon your specific debt situation, it may even require you to practice frugal living at least for a few months so that you can save enough money to get rid of those payday debts that are seriously damaging your finances and pushing you toward a much deeper debt ocean. A well-planed budget will help you determine how much money you should save for the emergency fund and how much you should contribute to pay back your debts. When it comes to maintaining an emergency savings fund to manage your payday loan debts, a general rule of thumb is to save at least 10% of your income every month.

Consolidate Your Payday Debts With A Conventional Loan

Considering the very fact that the outstanding balances on payday debts increase at a lightening speed because of the extremely high rate of interest that lenders charge on it, it is always advisable to first stop this fast growth of debt. An easy way to do this is to consolidate all your payday debts by taking a conventional loan, such as a personal loan or a home equity loan. Obviously, the amount that you have to borrow as part of this new loan must be large enough to cover all your existing payday debts. Once you pay off all the debts, you will be left with just one conventional loan account instead of multiple payday loan accounts. This is the best way to manage your payday loan debts. Conventional loans charge very low interest rates as compared to payday loans. Besides that, you also get an opportunity to pay back in easy monthly installments over a certain period of time. Thus, creating and maintaining an emergency savings fund also becomes much easier.

Transfer The Monthly Payments Of Debts To The Emergency Fund Once The Debts Are Paid Off

If you have paid off certain debts in full, you are advised to continue making those monthly payments that you were earlier paying toward those debts; it is just that this time the payments have to be made to your emergency fund account. This is another wonderful strategy to make your emergency fund stronger and healthier.

Spend Less, Earn More

Last, but not the least, while you are working on your strategies to maintain a decent emergency fund to manage your payday loan debts, you must always keep your focus on spending less and earning more. Though your budget plan will help you identify those areas that you can work on to reduce your expenses, in order to earn more, you will have to consider options like having a second job, working overtime or other such things. When you start spending less and earning more, you will definitely be able to save a great deal of money, which will help you manage your debts more efficiently while you will have much better control of your finances.

Overall, if you keep in mind the above things and follow all the points thoroughly with good financial discipline and with strong determination, it should not be very difficult for you to create and maintain a decent emergency fund to manage your payday loan debts.

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