When you are thinking about personal finance, you will come across hoards of information about budgets and savings accounts. While budgeting offers the framework of building your finances and turning your income into earning you a stable status. If your personal finance scheme involves building a savings corpus for the emergency, you will never find yourself worrying about the credit card bills and the small urgent loans like the payday loans.
Credit cards are a necessary evil. You cannot avoid the use of credit cards even if you have ample cash to meet each one of your requirements. This is so because the credit bureaus use the credit card usage details or the simply speaking the credit details of your and the repayment history to calculate the credit score. If you do not have credit cards this can mean a negative thing for your credit score. However, a lot of people fail to strike a balance between the right spending and extra spending on their credit cards are found carrying their credit card debts to subsequent months thereby paying high interest rates on them. A high usage of credit also shows that you are unable to manage your finances in a better manner and hence the lenders will be seen shirking away from you when it comes to making a lending decision to you.
There is another set of loans which are specifically designed to meet your urgent small fund requirements. These are popularly known as the payday loans. These loans are offered for a short duration as small as 7-14 days and the borrower is required to make the repayments by their next payday and hence the name payday loans. These loans should be best avoided. Although one would attribute this to the high interest rates associated with these loans and the negligible flexibility offered in the repayments there is another vital factor which most of the people fail to understand. Payday loans are such short loans that they are never accounted for in the credit score calculations by the bureaus. This means that no matter how diligently you pay them they are going to make no difference to your credit score. However, if you go wrong with the repayments and delay or default in the same the lenders report the same to the credit agencies which further convey this to the credit bureaus where calculation affect your credit score and pull it down considerably.
Creation of an emergency fund is often seen as a great step towards meeting your urgent needs. It offers an opportunity for people to become their own lenders at the times of emergency. A loan to themselves which they need to replace as per their own terms and conditions. However, one should always set rules for replacing the money in the emergency fund which they had to pull out owing to emergency situations. Failure to do so may lead to the depletion of the funds and then one would find themselves at the mercy of the payday loans and the other lending agencies at the times of emergency.
When you are faced with an emergency situation and are forced to take payday online loans with bad credit you need to be sure that you do not let any other debt build up unnecessarily. If you can successfully do this you will never find yourself worrying about the repayments of the debts and also about your financial well being as a whole.
Being in debt does not mean a financial death situation. In fact you have all the means to get out of the debt situation easily. However, in the current economic scenario it is a must that you try out all the means to look out for ways and means and tips which help you decide the correct way to your financial independence.
If you feel that the self help efforts are not paying the desired results, there is no wisdom in waiting and expecting that your debts will ease by themselves. In fact one should contact the financial advisors to devise a plan to get out of their debt situation at the earliest.
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