Avoid The Trap of Borrowing Money

The Perils of Payday Loans

paper bills of money sticking out of a jeans pocket
money-3115984_1920 by capri23auto from pixabay

“Neither a borrower nor a lender be; / For loan oft loses both itself and friend.” by William Shakespeare, from the play Hamlet.

It’s a familiar quote. We’ve all experienced situations where a friend wants to borrow money and it makes us uncomfortable to say no. If they don’t pay it back it will damage your friendship and sometimes that’s too big a cost to bear.

If the friend has no other option, I make it a one time gift, with no strings attached. That way, if they can’t repay it, I haven’t lost a friend.

But I never do it a second time.

If you find yourself in a situation where you can’t make your monthly bills and you have exhausted every other option, you might be considering getting a Payday loan.

Consider this option carefully.

A payday loan is a short term loan from a lender that is not a bank. I’m not talking about someone on the street lending you money. These are established storefront businesses that specialize in short-term loans. This type of business is usually identified by a sign that says: cash loans or fast cash. The lender charges a fee for the loan plus interest.

The Loan Is Due on Payday

The loan will be due in a short time, which makes it almost impossible to pay back for someone who is struggling to manage their day to day expenses.

When you can’t make the payment you will get an extension, for another fee, plus more interest.

Very quickly you will owe almost double (or more than double) the original loan.

My advice: Never use payday loans.

Never. Ever. Once you start using payday loans it is seriously hard to pay them back.

A payday loan is easy to get and you don’t need to have a good credit score. That makes them tough to resist if you’ve had trouble managing your money in the past. It also makes it more dangerous for you.

Things you can do instead.

  1. Get another job. Cash in your empties. Visit the food bank.
  2. Eat beans, couch surf, and quit smoking and any other costly bad habits you have.
  3. Sell something. Stop spending money.
  4. Talk to the landlord or whoever you are behind on payments with and see if you can make arrangements to pay them with your next paycheck.
  5. Credit cards. I’m not a fan of using credit cards to tide you over until your next paycheck. Credit cards should only be used when you have the cash to pay them off. However, the big exception is payday loans. A credit card will charge you a lot less interest than a payday loan and is less risky. Here’s the caveat: if you find yourself using a credit card to avoid getting a payday loan, you need to reboot your finances right away.
  6. Talk to your bank. You may qualify for a line of credit, which charges a lower rate of interest than a credit card. You still need to work hard to pay the loan off, but it’s much better than a payday loan.
  7. Borrow from friends or family. Admit you are in trouble. Enough said.
  8. Pull money from your retirement fund or your emergency savings.

If you are still considering a payday loan, you need to take quick action to stop the outflow of money and get your spending under control.


I used to be an accountant in another life and I’m full of advice about money — just ask me.

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