Budgeting For Beginners

Payday loans are a great way to deal with small financial emergencies that pop up, and most loan companies require you to have steady employment when you first take out a loan. However, it's always possible to lose your job while you're still paying off that small loan. If your boss gives you a termination notice or personal health problems cause you to quit voluntarily, take these steps to stay on top of your debt obligations.

Notify Your Lenders

First, contact the companies that lent you money through a payday loan and let them know that your job status and income levels have changed. Trying to hide the fact won't hurt you if you can keep up with the payments, but it prevents you from getting some forms of help when you happen to fall behind. Being up front and honest with your lenders is the best way to negotiate discounts and different payment plans. Your lender may want to know what kind of unemployment benefits you're receiving since you can use some of those payments to stay current on the loan.

Use Protection or Forgiveness Programs

It's best to look for payday lenders who offer job loss insurance or payment protection plans for a small extra fee. By paying for an optional protection program, you can gain benefits like the following:

• Deferred interest compounding for a set number of months or until you find a new job
• Forgiveness for the usual penalty fees that add up after a missed loan payment
• Hardship programs that allow you to pay a reduced payment for a set number of months to discharge the primary loan amount with minimal additional interest.

These types of programs and offers are not always widely advertised by lenders, so call and ask your provider specifically what kind of help they offer to customers who are struggling with payments.

Find a Credit Counselor

Working with a licensed credit counselor is a good way to keep your finances on track when unemployment surprises you. A counselor recommended by a state or federal agency can help you decide what percentage of your savings should go to your debt payments. They can also negotiate with the lenders on your behalf to find a compromise both you and the payday loan companies can agree on.

Negotiate a New Rate

Whether you work with a credit counselor or take on the challenges of negotiating your debt on your own, make sure to discuss your options with your payday lenders before you stop making payments and go in to default on the debt. Some companies are willing to take very small payments for a few months, as long as you're willing to send in something to go towards the interest adding up over time.

Before rushing to take out another loan to fulfill the first, see how you can lower your monthly costs just by asking for a longer payment plan. You may have to switch to making a payment every two weeks or sign a new agreement, but the reduction in payment size is the best way to stay current on a loan no matter what happens to your income level.

Setup an Emergency Budget

Finally, create an emergency budget that prioritizes your basic needs, followed by your debt payments and other obligations. Getting assistance from state and private programs to lower what you spend on utilities, food, or housing costs can free up more of your money to stay current with your payday loans. Even if a grant or assistance program is blocked from being applied to loans or debt payments, you can still put the money to good use to free up other parts of your budget.

For more information and options, talk with a payday loan company, such as Payday Express, directly.