As my regular readers may already know, recently I’ve been getting my financial deck of cards in order. I’ve been reducing non-necessary expenditures, paying off high-interest credit cards and lines of credit, and refinancing.
What started the ball rolling? Checks started bouncing. That’s never good. It turns out that my line of credit was maxed-out. Also, not good.
Normally I wouldn’t recommend a cash advance or any kind of payday loan. Why? Their interest rates are usually enormous (relatively speaking). But, that got me thinking. One of my "bounced checks" was a PayPal micropayment for $0.02 (yes folks, two cents). Since I didn’t have enough money in my account to cover it, I was charged a $19 NSF fee. No, that’s no "interest" per se, but it is extra money that I have to pay for them loaning me the two cents. So, when you’ve found you’ve over-drawn your account and don’t have the funds to cover checks you’ve already written, payday loans may be a logical choice.
In the interest of fiscal responsibility, you should also cut as much expenses as possible (do you really need cable/satellite TV? Is your Netflix account worth going in to debt for? You’ve already got a land-line, why do you need a cell phone). Prioritizing wants from needs will help dig you out of the hole, but sometimes an infusion of capital may be warranted.
As of today I have a hospital bill (babies are expensive), a credit card, a couple no-interest lines of credit, a mortgage, and a car-loan. We expect the high-interest part of these will be paid in full with our tax refund, and the rest (excluding the car and mortgage) we have budgeted to have paid off by the end of Calendar Year 2008.