Payday loans are not an option to make ends meet, experts say
INDIANAPOLIS — Amid the highest inflation in four decades, financial experts are urging consumers to use any option to pay their bills — besides a payday loan. These loans offer a “cash fast” option, but they often lead to a dangerous spiral of debt.
“So you can really end up in a debt cycle because there’s so much to pay back,” explained Andy Mattingly, COO of Forum Credit Union. “Then you constantly borrow every week or every two weeks. So you can just step into that cycle, and you can’t walk away from it.
Payday loans are generally short-term, high-interest loans that are usually due on the day of your next payday. Experts said this should be your last option, and even personal loans are a better option.
Analysts explain that personal loans work for certain needs like a car repair that costs a few thousand dollars.
“Maybe take 12 months or 24 months to pay that back,” Mattingly said. “This is a good opportunity to do so.”
Your Money Line CEO Peter Dunn adds that a second temp job can make ends meet these days.
“There’s a real problem that needs to be fixed and this extra income for two months, one month can actually solve that problem,” Dunn said.
Dunn reminds Hoosiers that while inflation affects us all, it doesn’t affect all financial corners. Things like rent, mortgages, and car payments aren’t affected by inflation because they’re part of a contract.
Dunn said it’s consumer spending that should be curtailed.
“Grabbing your bank statement, going through it, categorizing your expenses is an important thing to do,” Dunn said.
These experts add that now is not the time to withdraw money from your 401K or other retirement accounts.
“People panic at times like these so they will take money out of retirement investments. So not only will they suffer losses, but they will also have a tax liability and then a penalty for taking the money out. earlier,” Dunn explained.
Dunn added that now is not the time to stop investing your money.
“I think stopping investing is a huge mistake right now because you should be buying low,” he said.
Finally, Dunn said now is not the time to pay more on a mortgage.
“Let’s say you have fixed rate debt, like a mortgage, it doesn’t make much sense to pay extra on your mortgage right now,” Dunn said. “It’s usually a reasonable thing to do, right now it doesn’t make much sense because it’s a fixed low rate.”
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