The existence of loans paved the way to the betterment of society. Back then, loans are pretty straightforward; you can approach a lender and he will give you the money. You must repay the full amount of the loan, along with some interest rates. Then everyone’s happy. As the nature of loans changed over the years, society now has an imminent problem: loan dependency. At first glance, there seem to be other more potent problems. But if you look deeper, loan dependency can really be a major life issue.
Loans are Negative Debts
Debts are divided into two types – positive and negative. Loans fall under the negative side because you have to pay for them on a term basis. More importantly, failure to pay a loan will set you back. The best way to mitigate a negative debt is to get it out of your system as soon as possible. Pay off the loan, and then move on with your life.
Loans Can Control Your Life
Mismanaged loans are like clamps – they press on harder until you are no more. Loans can control your life starting from the financial standpoint. From there, the stress brought by unpaid loans can seep through the other aspects of your life. Instead of being controlled by loans, seek ways to control them. Loans are means to an end, not a way of life.
Interests Will Tear Your Finances Apart
Even if you can pay your loans regularly, interests can cause financial adjustments over time. The adjustments will cause a dent in your finances; instead of saving the extra money, it goes for interest payouts. That can be saddening or downright frustrating. Manage your loans well, and reassess your financial actions.
Loan dependency is more prevalent in poorer, urban areas. However, the rich and the middle class are also getting their hands on high-value loans lately. Loans are not generally bad, as long as you keep a vigilant eye over your borrowing habits. Also, you must repay a loan before applying for a new one.
While payday loans are highly popular, they are often painted negatively. And why not? A payday loan or cash advance has outrageous fees and little window of time for repayment. Small-time lenders issue payday loans for employees, especially those who are having financial challenges. Nowadays, even large lenders are offering cash advance programs with ‘fair’ rates and fees. If you’re under the agreement of a payday loan, do not panic. You can ease out of the contract through these simple steps:
Focus on the Amount
The amount of the payday loan should be your primary concern. It will take only few days to few weeks before the loan can reach its maturity. Once you have the amount in mind, you can come up of ideas how to repay it. Also, most payday loans are fixed. Settle for smaller amounts so that you won’t be stressed by large amounts in limited time.
Find Side Hustles with Advance Payment
Side hustling to repay your payday loan can be difficult, but attainable. There are hundreds of websites accepting freelance gigs. A best example is Fiverr. If you have a skill, you can quickly offer your services in the site. You just need to make sure that your services are appealing to clients. Usually, it takes few days before payment can be received. Branch out to other websites if you need extra dough.
Approach Your Friends
When all else fail, you should seek the help of your trusted friends. Borrow small amounts to pay off the loan, but don’t forget about repayment. Very likely, your friends will let you borrow the amount you need. They may tease you a bit, but that’s better than unfair penalties.
Payday loans are only temporary solutions – a patch against a leak. You don’t need to entangle yourself with a cycle of debts, insane penalties, and horrible collections process.
Loans are competitive debt instruments of the modern world. While a loan’s nature has remained constant for many years, lenders have come up of many interesting programs which appealed to people. Even if loans are considered liabilities, there are several ways to turn them into assets. Turning a loan into an asset will help you achieve a better financial state.
Use the Loan for Small Business
Do you have a small business idea that’s been lingering for years? A loan can help you fund that idea. The business will have trickle profits over time, thus becoming a new asset that can help you in the future. Eventually, you’ll be able to repay the loan and your business ROI will spike up. Just remember that starting a small business requires hard work and dedication.
Issue Smaller Loans to Your Colleagues
Now, you’re approved for a loan. What’s your next step? You can freely buy the latest gadgets you want or go for a vacation. A better way: issue loans to other people! Become an independent lender by issuing small loans with manageable interest rates. As the interest rates compound, you’ll have the substantial amount to pay off the loan. Moreover, you now have a lending business that can run for years.
Investments are your hedges against inflation and other financial woes. You can use a loan to purchase a high-yield investment. Stocks and mutual funds are great choices since the risks are variable. You can also purchase collectibles since their value rises extensively each year. Someday, your investments will bloom and you now have additional assets to keep your life secured.
Loans are helpful, but only if you use them properly. Don’t use a loan to acquire more debts because that will totally affect your finances in a negative way.