Tuesday, November 29, 2011

Five-Minute, Short-Term Cash Shortage Solutions

Many of the personal financial advice "gurus" get it wrong. They think that the reason people are dealing with debt or an inability to pay bills is due to over-consumption – buying more than income allows. The real statistics tell a more nuanced tale, one which can be broken into different types of financial dilemmas.

1. Sudden reduction in household income before the cost structure can be changed - For example, if your hours are cut due to the recession, or if there formerly were two wage earners in a house but now there is only one, the simple answer is "cut your costs!" But that's overly simplistic. If you rent an apartment, it's difficult to suddenly move to a cheaper place if you are in a 12-month lease. You might have car payments – selling the car might make it harder to change jobs or keep the job you have. Some items (entertainment, expensive foods) can be cut back, but not some of the bigger ones.

2. Complexity and time requirements overwhelm the busy working person – Bill paying has gotten more complicated in the digital era. You might pay everything online, but there are times when deposits and debits do not post in real time. You still need to keep offline records if you want to be completely accurate. But in a busy time period, it’s easy to make errors or forget to check your balances.

3. "Pig in a python" expense accumulations – You can budget for all the predictable expenses and allow for $200 or $500 of "surprise" expenses some months. But a quarterly insurance payment, a medical emergency and a car repair in one month can add up to a lot of trouble in paying bills.

The important thing to understand is each of these comes with a different solution. One solution that covers several of these dilemmas, however, is online payday loans. Particularly when you face a "pig in a python" scenario, it can be hard to pay for it all at once. But with fast cash advances – loans based on your employment status, not a collateral or credit score – you can flatten out that snake, so to speak.

Paycheck loans need to be paid back in one, sometimes two pay periods. They must be thought only of as short-term loans. Otherwise, that snake stretches out and follows you around!

No comments: