Avoiding the Cash Advance Addiction: Tips to Plan for a Secure Financial Future

May 15, 2008 · Filed Under cash advance

Cash advance companies prey on the temptation of spending money before you earn it. This is the complete opposite of good financial planning. The general rule for your finances should be earn money, put a small percentage in savings and then spend. In today’s economy that can be a difficult rule to follow, but it is the only way to avoid the cash advance addition.

You may be surprised to learn the average cash advance customer takes out nine loans a year. They get in to a debt trap that seems easily remedied by an expensive loan. In realty that loan is hurting them later in the month when they are expecting to have a paycheck. Securing your financial future will never happen if you continue to use the payday loan services.

Here are some tips to help you stay away from cash advance predators.

Know Your Finances and Budget Them - This is the hardest part for some people. You need to put all your bills in front of you and lay out a monthly budget. Unnecessary expenses need to be cut back whenever possible. Don’t forget to include daily expenses into your budget, like groceries and gas. If possible leave a small amount as a cushion for an unexpected event. That “small amount” will go into a savings account.
2.

Set Goals – Goals are always a great incentive especially if they are attainable. I suggest starting out small. Lower the number of extra minutes paid for on your cell phone or only go out to eat once a week instead of two times. Set that little extra in savings.
3.

Save, Save, Save – Every little bit counts. Start by saving $5 a week in a coffee can. Throw all your change into a jar and at the end of the month you’ll have extra money to add to your savings.
4.

Open a High Yield Savings Account – Once you have saved $100 find a bank offering a high yield savings account. Many banks will offer you up to 3.5% interest or higher. The savings will be your “emergency fund” eliminating the need to ever get a cash advance.
5.

Stick to Your Budget – This may be hard when there is a big sale at the mall, but you MUST stick to your budget. Living above your means is not good financial planning.

If you follow the steps laid out above you will never have to rely on a cash advance again. Your savings account will be there earning you money until you run into emergency circumstances. That sounds better than costing you hundreds of dollars to get a cash advance. Let your money pay you in a high interest savings account not you pay for an advance on your money.

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