5 Tips how to Save a Surprise Ton of Money

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There are various ways in which you can obtain a fortune. You may sell a big business or receive a sudden chunk of money after a lucky set of numbers coincided with numbers that you chose for your lottery ticket. A big pile of cash surely seems to be quite useful and many want to spend money right away.

One of the first things that anyone should do if they came into possession of a large sum of money is to adjust their financial plan. Rethinking your approach to spending in general is also a very important part of money management. The general advice is to allow the news of getting rich settle in. You won’t make rushed emotional purchases that can be detrimental to your financial wellbeing.

There are several ways to preserve your capital from evaporating.

#1. Invest in retirement

If you have enough money to contribute enough to match the full employer contribution, you should definitely do just that. You can easily secure your retirement preemptively and reduce the “leakage” in your budget.

One of the best thing about this move is that it provides you with several important advantages including a serious tax benefit. A contribution to your 401(k) will not be taxed due to coming from your own pocket. This is a very good long term commitment. Remember that extracting funds from your 401(k) will not be taxed as well.


#2. Get of rid of your debt

There are various really annoying and limiting debts that may hinder your financial mobility and significantly reduce the very quality of your life. Getting rid of them as quickly as possible should be amongst your top priorities. The main advice will be to pay off the biggest debts with highest interest rates first and then aim for smaller less menacing debts.

Payday loans should be covered immediately. While there is a ton of various options to get a payday loan or an installment loan from private providers, you should always remember that they provide a fast and convenient service for a high price. You will have to deal with high interest rates that may go up to 400% per year. Paying them off on time is imperative.

Researches show that the vast majority of Americans with debt struggle to pay back their loans on time meaning that they often fall into a debt hole that does not always have a clear exit.


#3. Save your money

Creating a conserved emergency fund is a good idea. This will ensure a more stable overall financial situation since you will have a backup fund that can be utilized when you have some troubles. Most experts suggest that you should have enough money to allow you last comfortably for at least 3 months. The optimal size of your emergency fund should be around a sum that will help you to get by without any income for at least 6 months.

There are various factors that may determine how much money you need to have in your secret jar. Your total debt, current income, and some other factors may contribute to your calculations.


#4. Spend on Yourself

There is a big difference between mindlessly spending money of clothes and new devices and spending your money on yourself and self-development. You can invest your money in education, a new skill or a hobby. Something that can be both enjoyable and useful. Consider spending money on something really important for you or your family.

Get your second degree, invest in a trust fund for your children or give money to your spouse so that they could return back to school. You can avoid taxes by spending money on tuition (any sum under $10 000 will not be subjected to taxation if spent on education).


#5. Don’t forget about charities

While it is quite a good feeling to give and support s valuable social cause, but there are other interesting benefits to donating. For example, you can count on a deduction if you make a donation of $12 thousand (for single people) or $24 thousand (for married couples). Remember that you cannot give your money to friends or relatives, this will never help you to achieve better deductions.

High Interest Loans Are the Biggest Money Makers for Payday Lenders

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One of the recent trends in the payday lending business was that it was growing rapidly and seemingly without any limits. However, some experts say that this is due to the changing nature of payday lenders who are stepping out of their normal boundaries.

The Consumer Lending Index includes the best performing companies and the best one is Enova. The next in the rating is Curo Group Holdings. Both grew by a substantial amount with the former demonstrating a respectable 64% growth.

One of the core reasons of their top performances is the growing popularity of short term credits that are high interest products that have slightly modified parameters such as length, structure, and size. This makes them less of payday loans and more like a standard long term bank credit but with an ultra-high interest rate.

Obviously, companies do want to diversify their product lines and offer their clients as many various offers as possible. This makes it easier for customers to pick something that suits their needs. For example, the list of available products from payday lenders at UStarcash showcases a wide assortment of financial products that target different audiences.

New products with increased length and size quickly gained enormous popularity amongst customers who prefer new offerings over short terms and much smaller loans that they had to choose before. Special new lines of credit from Enova are now competing with a diversified product line from Curo which incorporated money transferring and some gold trading.

The prevalence of installment credits is what makes it very interesting for many customers. Most payday loans are structured in such ways that borrowers have to bring back the whole sum in order to avoid problems. This was not convenient for some clients and most lenders had to restructure their approach. This was also due to the tightening grip of the government on this issue. With more and more legislations being aimed at payday lenders, they had to diversify and offer more flexible products.

The peak of the industry in 2012 was due to the massive amount of loans that were taken by people as payday loans. The total volume of contracts reached a whooping $9.2 billion in 2012. However, over the course of 4 years, there was a steady decline to a less frightening $6 billion. Despite the decline, most companies showed a good growth that was mostly due to the shift from regular loans to installment lending. From 2012 to 2016, the industry showed an increase from $4.3 billion to a much more convincing $6.5 billion.

At the moment, most companies have fewer payday loans. For example, the share of installment lending contracts in the overall balance of Curo was about 60%. This company collects less than 30% of its revenue in good old payday loans. This means that audiences also shift towards the installment scheme.


Be Careful with Debt

This is exciting news, but there are some pitfalls that many Americans simply refuse to notice and keep getting into financial holes that do not have a clear exit. The situation can be scary for some uninformed borrowers who make rather questionable financial decisions. Some experts call the new scheme “predatory” and “unforgiving”, but the reality, just as always, is that people often do not read between the lines and fall victims to companies that do try to squeeze out as much revenue as they can.

Payday loans and short term installment credits can be very useful to a large amount of citizens who need temporary financial aid. However, all potential borrowers must know about the specifics of the industry.

For example, Enova’s loans can have an APR of 450% annually. These are numbers from so-called subprime options. If you can get above this level, you may count on much less aggressive interest rates in the range from 34% to 179%. Note that most industry leaders offer loans with very high interests with percentages going up to triple digits. The same situation can be observed all across the industry.

There is a new legislation in development that will somewhat cripple many installment credit products. This will be a good move on behalf of the government. While many people simply cannot survive without payday loans, the regulation of the industry is still subpar and could use some improvement.

The CFPB wants to improve the environment and put some pressure on payday lenders in order to change the playing field and level it for customers. Most Americans do need protection from their own responsibility.


The Main Takeaway

Lenders with diversified products perform much better compared to lenders who offer only payday options. At first, the diversification was a smart move to avoid strict regulations, but new installment products gained so much popularity that modern payday lenders rely on them even more than on actual payday products.

How You Can Improve Your Finance Management

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Taxes are paid and most bills are dealt with. This means that you have a pretty good understanding of your current finances meaning that it is the best time to pay attention to things that have been largely ignored during the tax season.

Analyze Your Taxes

Tax withholdings is something that you must inspect carefully. Due to slight changes in standard deductions and better tax brackets some may believe that they do not have to do much, but it is imperative to take a closer look at your withholding.

There is a relatively simple way to adjust them according to your income. However, you must also keep in mind the overall income of the household. Your spouse’s income should also be incorporated in overall considerations. Various credits and deductions should be accounted for as well. Note that you should always keep track of your credit. The best way to do it is to take manage your loans and take them with an assistance from specialists or at least get help from a single source like UStarCash.

A simple way of adjusting withholdings mentioned above is a special calculator provided by the IRS. Use this tool to estimate the optimal range of withholdings.


Don’t Get Scammed

There are lots of frauds related to tax refund and you should make sure that your tax returns are happening according to appropriate procedures. Scammers are active all the time, but when you are expecting to get back your money, you are most vulnerable to various fraudulent actions. Be careful.

There will be some really suspicious requests and people asking for your personal information such as Social Security number. If you receive such a request from a website or a phone, do not give anything away.

Regardless of what people on the other end of the communication channel are telling you, just don’t listen and call the IRS directly to receive proper consultations. The number of the IRS support is 800 829 1040.


Don’t Keep Old Documents

This can be a source of information for people who can get their hands on your documents. Do not just store it for no reason and dispose them as soon as your do not need them. Some governmental offices have special days when you can come and dispose of your old paperwork.

Another important thing is your own so-called “personal computer”. Make sure to carefully delete all digital data that contain any personal info. There is no reason to keep it all on your PC especially in our days when digital data is so vulnerable.

Loan documents should be stored until you pay off the debt while various receipts must be kept for 9-12 months. Tax documents should be archived and kept for several years (up to 7 years).


Manage Your Period Payments

We all notice that we spend way too much on things and services that we do not necessarily require anymore. Long forgotten information services and other recurring payments may seem small and irrelevant to your overall financial situation but they do pile up and create undesirable burden that can be easily avoided.

Review your subscriptions and decisively remove all unnecessary ones. This will dramatically reduce your overall expenses and help to stabilize your financial situation especially if you are experiencing difficulties with making ends meet.


Buy Construction Materials When They Are Cheap

If you have some renovation planned for summer, get all necessary materials right now in the end of May or in the very beginning of June. This is the period when prices are not yet inflated by the demand and you can still find a nice deal to save a couple of bucks here and there. You can optimize your renovation budget with proper scheduling and preemptive buying of various materials.

Can Financial Literacy Save America?

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The variety of forms and methods of managing personal finances becomes enormous with more and more complex systems being implemented. Managing credit and debt, paying for education, trying to save for retirement, and many other aspects of modern economy do not make our lives easier. We need to learn a bunch of things before we can start approaching the issue of personal finances.

Modern financial products are not simple. Even payday loans evolved to something very complicated. It is one of the simplest and most convenient forms of credit, but many people have problems even with payday loans. Imagine how hard it is to fully understand how credit cards with all their neat little details and hidden fees work!

Other aspects of personal finance management also complicate things. There are all those 401K, 529, 1040, and many other documents that you must fill out perfectly or else you will not only screw your wallet, but may also get in prison! With all that variety of responsibilities, bills, and credit options, managing finances seems like an overwhelmingly overcomplicated puzzle.

While many people including some federal officials claim that it is simply a question of financial literacy, the vast majority of modern scholars believe that being financially literate has nothing to do with being able to manage personal finances well enough. However, it is definitely much better for people to know how to handle the contents of their wallets.


Financial Literacy Rate Is Low

Most Americans struggle with filling out simple forms let alone understanding complex economic issues and complicated financial products. Less than 30% of surveyed people over 50 managed to answer just 3 simple basic questions about interest, inflation, and diversifying risks. Some may think that the situation is different with younger people, and some will be wrong. In fact, the youth is just as informed on the matter as elders. Over 40% of all students is on the lowest end of the financial literacy spectrum.

Uneducated people, minorities, and female citizens show the least level of knowledge in finance handling. Only 19% of people who has high school education only have enough skills and knowledge to manage their finances on their own.

Another concerning demographic is Hispanic and African Americans who usually score very low in financial concepts. It is unsurprising that they more often become debtors since the very concept of it is often not grasped by the fullest extent. Men usually answer questions related to finances much better than women.

The problem is that financial illiteracy can cost you dearly as shown in many researches that demonstrate how many people are making decisions that result in higher fees when handling credit cards. It is often the problem of lacking knowledge about financial products and debt in general. The same can be applied to users of payday loans who often do not read the conditions of the loan properly.

There is also a very important correlation between the level of education and income and financial literacy. People with less income and worse education usually have correspondingly lower level of money management skills.


Being Financially Smart Is Beneficial

As all of the above suggests, being a smarter has significant advantages. People with better financial literacy follow well-structured retirement plans, invest smartly, and correctly utilize credit in order to avoid falling in debt. People who know their finances usually do not make mistakes like borrowing money while harming 401(k).

The problem is that the vast majority of financially literate people come from white wealthy families. Their parents usually have their retirement plans set up and can teach about managing finances.

One of the most famous researchers about this topic is Annamaria Lusardi from the G.W. University. She is a very capable scientists and decided to conduct a thorough research to find gaps in financial education between different demographics. Her findings suggest that financial literacy is poorly distributed in general and that this is one of the core factors driving the inequality. Her estimates suggest that about a third of inequality in wealth is a result of poor financial management on behalf of less rich people.


What Can Be Done?

Teaching financial literacy is what should be on top priorities. Basics of money management, taxation, debt management, and some other aspects of modern life should be delivered to consciousness of all Americans. The level of awareness and responsibility must increase dramatically in order for Americans to live better lives.

The main reason why education must be the main priority is that it is nearly impossible to change the financial framework in which we live. However, we can not only try to re-distribute financial literacy but also focus on providing better advice by expanding responsibilities and services from professionals in the personal financial management area.

There are also experts who argue that we must make sure that the very structure of the economy is capable of providing a healthy environment for regular people. While professionals and financially literate people usually can avoid various pitfalls, the amount of citizens who will become victims of debt is quite frightening.

Highschoolers Must Know More About Managing Personal Finances

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Nowadays, kids do not receive as much interesting and important information about the adult world. They are growing up unprepared for various inconveniences and difficulties of modern society. One of the biggest pivots is managing personal finances which is hard for some adults let alone children who suddenly become adults.

Most schools seem to offer diverse sets of courses and teachers are professionals, but the vast majority of schools simply do not have anything to offer when it comes to teaching children to control how they spend money, manage their budgets, and avoid debt. The latter is a pivotal topic since surviving and living a comfortable life in modern life depends on making debt and getting rid of it in a timely manner.

For example, payday loans can help you to pay bills and purchase something very important, but taking them without understanding consequences is a path to negative debt that can snowball out of control without proper management.

Modern kids must learn about credits, credit scores, budget management, paying bills and taxes, and the importance of avoiding debt. These are crucial knowledge bits that actually help to survive in the adult world.

The situation is changing. The process is very slow. WE can and should make it faster. About two decades ago, only Illinois required its schools to teach children about taxes and personal finances in general. In 2017, the amount of states demanding schools to offer such lessons was increased to 17.


Is It Really Important?

For some reason, many people believe that personal finance is not a pivotal core class that should be taken by every single high school student. It is hard to argue that it is just as critical for a student as mathematics, language, physics, chemistry, and history. There should not be personal finance exams, but the importance of such knowledge should not be underestimated as well.

Over 85% of school teachers consider personal finance important and that we should implement simple yet efficient testing to make sure that children know how to survive in the “real world”.


Take a look at some stats:

Student debt is at its all-time high with $1.4 trillion owed in total by people in the US.

  • Consumer debt is creeping closer to mortgages.
  • 40% of millennials cannot deal with debt on their own.
  • Each 2nd millennial cannot save for their future.
  • The vast majority of students who use credit cards do not know fully how debt works.
  • About 43% of millennials borrow money from payday lenders and prefer rent-to-own stores.

The latter is quite troublesome. Payday loans are great to quickly pay bills or cover other forms of immediate debt, but they should not be used as a primary source of credit.

Payday loans should be used efficiently and correctly in order to avoid debt. The problem is that high school students do not know about it and spend money recklessly without fully understanding how to survive on their own.

College students can learn more about managing finances since most colleges offer business lessons. However, roughly 16 million young people enter the adult stage of their lives without college education meaning that they must learn about personal finance.


Personal Finance in Schools and Potential Problems

The first problem is delivering the knowledge to students. Debates are still being held on the form of lessons and efficient methods of teaching. Another problem is financial illiteracy of teachers. Recent studies showed that only 20% of teachers feel ready to teach how to manage money, debt, and taxes.

Implementing personal finance courses will require us to train more specialists. This means that we must partially overhaul the very system of education and add more personal finance lessons for college students who will later become teachers.

Students in colleges do receive some knowledge on personal finance management but this knowledge is very limited and insufficient. There must be standards that will ensure that our teachers can provide consistent informative teachings for their students.

There is also a debate on whether personal studies should be taught in school. Some believe that this is knowledge best taught at home by parents. However, more than 70% of parents feel either incompetent or uncomfortable talking to their children about money. This means that there is no way that children can be taught at home.

The generation gap is another problem. A lot of baby boomers are not prepared for retirement as recent studies showed. This generation does not have necessary knowledge to teach the new generation that is growing up. Millennials are bounded by debt also do not have (on average) necessary skills and experience to efficiently teach their children.


Classes that Should Be Taught

The last question is the volume and form of lessons. Which classes should be prioritized? Should we focus on practical moments like filling out forms and learning to work with documents? Should we emphasize the importance of money management in general and teach how to spend, save, and borrow money? This is a very dark alley.

However, we have some classes that are being developed or already implemented:

  • Saving money in banks;
  • Investments, planning, and saving;
  • Interest income;
  • Creating assets;
  • Managing credit and debt;
  • Everything about credit scores;
  • Sources of income;
  • Paying taxes;
  • Insurance and its forms.

We need more lessons and we must focus on managing debt. Payday loans and credit cards can be quite useful when used correctly. Taxes and fees will be less burdensome if handled properly. Saving will be easier if spending is reduced reasonably.

Payday Loan Approval and Credit Report — Will There Be a Correlation?

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If you are worried whether you can receive a payday loan because of problems related to your credit score, there are several things that you must be aware of. First of all, credit scores can be changed and you can directly affect how they change. Another important thing is that you can receive your credit report from any credit bureau if necessary.

Every single lender uses some form of background checking in order to assess possible risks of lending money. No one wants to risk money for no reason and lenders are afraid of give money to people with bad debt. This leads to a particular situation when banks and payday lenders need to know whether a person is a reliable borrower.

This is where credit bureaus come into play. These companies use various metrics to evaluate potential borrowers and provide a special score that determines whether it is safe to give money to that particular person.


Using Credit Report to Your Advantage

When you come to the office of a payday lender and apply for a credit, the company will conduct a simple background check by looking at your credit history and current score and determine whether you can be trusted as a borrower. One of the problems that was evident in some states is that payday lenders sometimes ignore some aspects of the credit score and give money to people who cannot really pay back.

This is a double-edged situation. People with bad credit scores are generally worse borrowers and often generate debt that they cannot afford. Credit score was partially encouraged by such situations and exists to protect customers who cannot pay their debts. On the other hand, such blindly given away credits put lenders in peculiar situations where they need to somehow collect their money but simply cannot due to inability of the borrower to pay back.

Payday lenders work (in the vast majority of cases) with three major credit bureaus: Experian, Transunion, and Equifax. Some of these companies use FICO scoring systems other rely on Vantage score, but it does not really matter which system is being used in general since bad score means disapproval from any payday lender.


What can you do in such situation?

  • First of all, you can apply for a credit is several companies at once. Every lender has their own thresholds regarding the credit score of a potential borrower. If one company said “no”, another one can be much more loyal towards you.
  • The second thing is that you can try to change your credit score. This is not possible in a couple of days, but by slowly increasing the limit on one of your credit cards you can significantly improve your FICO score. In order to start doing something, you will need to receive a special credit report where your score is detailed and presented in a comprehensible form.
  • While your credit score costs money and you won’t receive it for free under normal circumstances, there is a way to get a free credit report according to the Fair Credit Reporting Act. This legislation allows borrowers to receive a free credit report if they were denied a credit in a bank or a registered licensed lender. You won’t receive necessary evidence of denial in an online lending company, but payday lenders will gladly offer you all necessary information that you will need to prove the fact of denial.
  • Then, you will have 60 days to apply for a free credit report. This is why you need to know which type of score and provided by which company is used by the chosen lender. If you were denied a credit, just inquire why and how you can improve your score. Ask about the credit bureau that provides scores to the lender and apply for a free credit report.

The Main Takeaway

Credit score definitely affect whether you are denied a credit or not. However, you can change the it and even receive a free credit report to understand the problem and eliminate it.

Online VS In-Store: Which Are More Beneficial?

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There are different situations that may require financial assistance from external sources. When you have a peculiar problem and need money right here and right now, a small short-term loan is exactly what you need. However, there are several ways to obtain such loans. We are talking about numerous online and land-based outlets that offer you various credit options.

While both options may seem quite compelling, there are significant differences that you need to take into consideration when taking a loan. Any credit is an additional burden which will cut a sizeable amount of your income for some time. This means that you need to be cautious and choose your credit provider wisely.


Key Differences Between Online and “Offline” Lenders

Several aspects must be thoroughly analyzed before you can take a good loan. If you need to find a good deal, considering all possible options is a wise choice.


Customer Support

One of the biggest advantages of visiting an offline outlet is that you can see a person who will guide through the process face to face. You can ask all necessary questions right away and receive any additional information if you need it. The vast majority of such stores try to cater to their customers and provide exceptional service.

Online lenders will give you another set of advantages. For one, you don’t need to talk about your financial problem with another person. You can use a live chat or simply read an informative FAQ on the lender’s website.


Brokers and Direct Lenders

While there are massive benefits to taking a loan online, you must be very careful when it comes to borrowing money. Some websites will offer you good deals and try to lure in with big promises, but in reality they are simple brokers trying to work as middle-men in this industry.

Offline stores usually represent the organization that will give you money meaning that you will be able to talk with an actual representative of your direct lender and receive all necessary information without all that wrapping made of ads and promises.


What about Licenses?

Whenever you visit a website, you should check whether a lender is licensed and can operate in your own state. This is something that many people forget when applying for a credit. Some companies have nationwide marketing campaigns, but serve only a limited amount of users. Checking the license is one of the first steps that you should make.


Benefits of Online Short-Term Loans

While there are many positives in doing your financial tasks without leaving your home, other benefits can be even more impactful.

  • Spend less time. You won’t need to waste hours on queues in stores and spend time travelling around and waiting.
  • Easier approval. Many companies are competing in a very aggressive environment and try to make the whole process of borrowing as comfortable as possible.
  • You have information. There are tons of reviews and testimonials in the internet. Use this knowledge to your advantage, compare prices, and make right choices.

Disadvantages of Borrowing Online

Benefits may impress you and force you to start contemplating about taking a credit right now, but you should be aware of cons that are also quite noticeable.

  • You will pay more. Most online short-term deals are expensive and will significantly burden you and your family. Think carefully whether you need it.
  • Overpaying for fees and interest. Even if you want to close the loan before time, you will still have to pay (in most cases) for fees and interest.
  • Some websites are pure scams. Remember that reliable companies do not ask for your financial information. In fact, they will often only ask for the credit card number to transfer the money. However, some scams mimic trustworthy websites and try to steal credentials from their users.

Scams Can Be Avoided

The latter is very dangerous and, sadly, more frequent than you imagine. There are lots of ways for social engineers to try and steal your data. They will create websites that are copies of trusted web portals and bombard you with invitations through various online ads. Knowing how to avoid a scam is a handy skill for anyone.

Here are some signs that could indicate that you are on a fishing website:

  • Problems with grammar and layout on the website. A sloppily made web page is your first warning. A reliable company will invest enough in their online infrastructure to not have such issues.
  • Advance payments. Lenders do not need you to pay any fees and taxes upfront. Whenever you see an option like that, go away.
  • Interest rates are too good. Lenders do not run charities. They want to make money. If a website offers interest rates that are way below the market median, you should be very careful.
  • Readiness to give you money. If a website says that they will approve your application within hours, something fishy is definitely happening behind a pretty web page.

If you try to avoid website that can be described with any of the descriptions above, you will jump over pitfalls that scammers meticulously set up all over the internet. You can also use other tricks that will prevent you from being scammed.

Here are some of them:

  • Research. Reading articles and reviews is a good start. Another important thing is to carefully examine the domain name. EasyLoan123.net.org is a very strange address that a good company will never use.
  • Don’t be afraid to be annoying. Inquire about the full business name of the potential lender and check their licenses. Remember that you can always check the license officially.
  • Do not share personal data. Any sensitive information should be exchanged with only trustworthy companies. Make sure that you researched and inspected the website before sending any personal data.

Benefits of “Offline” Short-Term Loans

We did not forget about land-based outlets that also offer quick buck to any American above 18-21 years. However, you need to be careful when taking a credit in an offline mode as well.

Here are some benefits:

  • You can inspect their business. A quick glance at the office and you will understand whether you entered a shady shack or a respectable place that can offer high quality financial service.
  • Immediate support. You don’t need until a technician or a manager is ready to answer your question. Ask right away and receive all important information immediately.
  • Assistance from personnel. You will be able to apply within minutes and quickl fill out all necessary forms.

Disadvantages of Borrowing Online

Borrowing from a company that has a network of outlets is generally a better idea since only established franchises and huge companies can run large scale operations with multiple offices all across the country. However, there are still some problems:

It takes long to get a credit. While you can get a credit with 2-3 clicks on a website, you will actually have to do some work before you can get a credit in-store.

There are several limitations that you will have to deal with. You will get less interesting options if you are not a resident of a specific state.


Choosing the Right Option

It is critical to remember that a short-term goal is something that you can use to your advantage. However, a bad choice will lead you to problems that are hard to anticipate.
Here are some things to consider:

  • The true cost of a credit. There are some loans where you will pay up to 400% of the amount you initially borrowed.
  • Creditworthiness is yet another important factor to consider. Some companies are less kind to people with debt while others will gladly offer you interesting solutions.
  • Also think carefully about turnaround periods. You will want an optimal period that will give you an acceptable balance between the interest rate and timeframe.
  • Regulations vary from one state to another. There are 10 states including West Virginia, Vermont, New York, and Maryland where lenders must comply to a special interest cap.

The Main Takeaway

Both options can be acceptable when you are searching for a source of a reasonable credit. You just need to be careful and select your lender wisely.

PayDay Loans Start to Pile Up? You Can Do Something About It!

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Imagine that you owe over $5000 to several payday lenders. This could be a devastating situation for some people. Usually, the avalanche of debts starts with a small loan that you don’t know how to pay off. At some point, periodic payments may start eating up to 100% of your income (maybe, even more). However, you can get out from this seemingly eternal cycle.

There are people who have multiple debts. There was a case when a single man had 24 (!) loans. He didn’t know what to do.


Payday loan shops are popping up here and there. Nonetheless, the problem is that many people do not know how to use payday lenders’ services. Companies only offer specific options and products. It is up to a client to decide whether they want to purchase that product. Sadly, many people do it without reading between the lines.

People also started to pile up debts due to an abundance of online outlets that offer quick cash without even forcing you to go out. The cycle starts casually. You may need a small amount of money to pay your utility bills on time or change tires. However, a single loan does not save you. In fact, you will have to pay back but you are still short on money. In fact, you may have even less money due to commissions. This is why you must calculate whether you will be able to pay off debts.

Over 30% of people who want to restructure their debt have at least one loan that comes from a payday lender. The vast majority (over 70%) have more than one payday loan that burdens them. The average number is quite frightening. An average debtors owe over $3.400 to 3 or more lenders.

However, there are some actions that you can take in order to save yourself from falling even deeper into the debt pitfall. One of the solutions is to get rid of many small payments and consolidate the debt into a single one. Your new interest rate will be determined by your credit score. People with lower credit score will have to pay higher rates. There is nothing anyone can do about it. Note that breaking a cycle is more important than paying a little extra. Trying to pay back to a bunch of lenders on different days of the week is stressful and bothersome, but a single debt (even with a slightly higher overall interest rate) is much easier to pay.


What worries the most is that people often skip important lines in the contract when they take money. Many do not even notice the real amount of money that they will have to pay. Lenders must point out the total cost of borrowing and they do, but that line can be hidden somewhere in the document in a place where you won’t even notice it.

Another good idea is to ask for money from a non-profit credit counselor. They will help you to enter negotiations on the right note and reduce the overall cost of borrowing to a less frightening amount. The problem is that consolidation of debt is a process that requires all lenders to agree to give up their personal interest and consolidate. The negotiation process can be complicated.

One of the best advices to people who want to get a credit is to not take too much. There are people who own money to payday lenders, but their overall debt could as high as $50 thousand with a large portion of that sum being formed by other insecure debts. Credit cards are the real plague of the society and most of people in America have problems with credit cards.

Another good advice to all potential debtors is to start building a small emergency fund right away. Taking a payday loan now and then is not a problem if you can control your expenses and have a backup cash reserve that will protect you from borrowing too much. Just don’t ever get in a situation when you take 2-3 loans simultaneously.

Payday Lenders Are Happier Under Trump

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Thousands of payday lenders all over the US are happily rejoicing since recent decisions made by the Trump’s government have made their lives that much easier. Businesses that basically destroy families financially have lots of benefits provided by the government and the Republican Congress seems to be quite happy about it.

A recent joint resolutions were recently introduced in the senate. The main generator of the idea is Lindsey Graham who represents South Carolina. The new legislation will not only allow lenders to work more actively in the field, but strip them off various burdens that affect short-term credits. Limitations and restrictions were imposed previously be the CFPB, but their rules are now undone. In addition, they cannot try to create something similar in the nearest future. This makes all people more vulnerable to predatory actions of small payday lenders.


One of the rules that protect people from lenders enforces the necessity to check whether a person can actually pay for their loans. This regulation was supposed to be shipped in January, but was held back by the head of CFPB Mick Mulvaney who is also one of Trump’s appointees.

The law is under reconsideration process, but it does not seem that the government wants to make it happen. In fact, many decisions from CFPB are quite predatory and allow many lenders to act even more aggressively which is not something that you would expect from a caring government. The previous government under Barack Obama was not so kind to the payday loans industry.

It is not only about a single bureaucrat and a senator, but about a whole bunch of people in the government who seem to forget about their duties when it comes to protecting law abiding citizens from predatory businesses. In fact, over 40 senators from the Democratic party decided to write a special letter of concern to the director of CFPB. They urged him to continue working in the direction of bettering the industry and creating stricter regulations that businesses would have to abide.

The problem is that legislators do not have to fight for this rule to happen. A simple majority will tip the scales in any direction. This is something that senate is struggling with – to make things actually happen. The new resolution from the South Carolina senator. It is important to note that senator who decided to abstain from signing the letter will be re-elected in states that were won by the current president. This seems like a very sad notion.


There are many payday lenders who actively participate in lobbying for their industry. Their efforts do seem to pay-off as Republicans consistently try to attack regulations that the CFPB are trying to implement in order to restrain the industry that grows rapidly and throws more and more Americans in the vortex of financial problems. The Open Secrets data reveals that the amount of donations of lobbyists spiked massively after the passage of the infamous Dodd-Frank Act about 8 years ago.

Over $9 million was transferred to various members of congress from payday lenders with $7 million of that amount going in pockets of republicans.

The CFPB was supposed to focus on creating a healthier environment in the industry and helping both consumers and lenders to level the playing field and make the whole market fairer. This was the main priority of the agency after Mulvaney occupied the director’s seat. However, nothing was done to actually protect people. In fact, the results of his activities were quite the opposite as businesses were allowed to increase the pressure on consumers.

There were several positive steps made by Mulvaney, but the way he freed several huge companies from being investigated is baffling. Just a couple of days before releasing his memo where he promised to work hard to protect people, he decided to drop a lawsuit that was made against several companies that charged over 1000% for their loans. You didn’t misread the number. One thousand percent.


While Mulvaney himself rejects all claims that he is working to protect interests of predatory businesses that sponsor his campaigns, his actions usually speak louder than his words and he is a true protector of lenders.

The industry is a huge pie with lenders generating crazy profits. The industry managed to pile up $9 billion in profits during the last year. This number may grow even bigger soon enough with 12 million Americans using payday loans on a regular basis.

While many payday lenders try to reason that their business is just something that fills the void left by banks and bigger financial organizations. Consumers do know that their work is harming the market and the society. The vast majority of borrowers are unable to pay off their bills and go deeper in the debt hole. For some reason, Americans cannot just default and try to take more money to repay the bill and fall in yet another hole. 4 out of 5 loans are renewed.

The CFPB was created to make sure that the market is safe for consumers and that all act according to a set of rules that minimizes potential damage. Nonetheless, the Trump’s administration seems to forget about it.

The Problem of High-Cost Payday Loans

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Politicians and public personalities alike call for proactive actions towards decreasing the burden from loans. Lending has become “predatory” as many point out. For some households, even the poverty premium on essential things are quite bothersome. Searching for a reasonable credit becomes increasingly harder with each year. The recent study by the several institutes shows, debt becomes a huge problem for the poorest. Roughly each 2nd poor household (about 20% of all households in America qualify as poor) have to spend up to 30% of their overall income to cover debt.

This situation is quite tough and requires attention from both legislative institutes and people who consider borrowing money. The debt burden can be unbearable and selecting the right source of credit is quite important.


Stress Inducing Loans

The high price of a credit pressures all people despite the implementation of the payday loans cap. People who cannot afford taking a high-cost credit have to continuously work against the debt and reborrow funds to pay for previous loans that were supposed to be short-term debts. Constantly trying to find a way to cover monthly payments and still paying an amount even higher than the original loan.

One of troubling symptoms of this situation is that child poverty is on the rise and has been rising ever since 2010 with roughly 35-40% of children in some states of America qualifying as poor. Millions of people all over the America are in big problems in regards to debt. All of them are behind their payments and have to ask for legal advice and search for a saving hand in specialized organizations. The discussion around this subject is gaining momentum, but there are lots of problematic factors that should be addressed in order to fix the debt crisis that currently overwhelms Americans.

One of better news in regards to this topic was recently showcased in many magazines. Michael Sheen, a famous actor and showman, decided to kickstart an independent organization to help out people in debt and search for better solutions to the problem in general. The End High Cost Credit Alliance is a special union of various charities and reliable fair lenders who try to solve the problem.

This is a good move on the star’s part, but we need more movements like that. Fair, cheaper credits will help on many fronts including the mental health of borrowers. Multiple studies showed that being in debt significantly increase stress. A high-cost credit is not just a simple monetary problem it creates a burden pressuring financially, psychologically, and even physiologically.

Payday loans are used by over 12 million Americans annually. Some of these people are taking several different credits at once. The correlation between borrowing money and the state of mental health is frighteningly telling. Over 38% of high-cost credit users report much poorer health.


High-Cost Credits Must Be Regulated

There are several proactive actions that have been taken by people in Washington DC, Colorado, and Missouri. In fact, 15 states implemented various programs to protect citizens from predatory lenders and create a healthier environment for those who desperately need financial aid. Colorado decided to double down on the issue and dramatically tighten the regulations regarding high-cost credits. Politicians of Colorado call for similar moves from the US government. Even adding a simple another verification step that prevents lenders to give money to borrowers who cannot pay was a huge step in the right direction.

Steve Helms, a senator from Missouri, says that fees and interest rates should be capped at 35% of the total amount of a loan instead of 75%. At the same time, the interest rate also needs capping as rates go higher and reach 400% per year.

The problem is that there are government bills like “Protecting Consumers’ Access to Credit Act of 2017” that will effectively undo all positive efforts from state governments.