In the same manner, you also should build an emergency fund to avoid being indebted to online payday loan lenders. But when you are hanging by a thread, barely able to breathe for fear that you will fall, it is difficult to envision an emergency fund. Nonetheless, as painful as it sounds, it must be done.
An Emergency Fund Will Deter a Payday Loan Lenders Away
Most experts recommend building an emergency fund that can answer about 3 to 6 months worth of expenses. Your eyes must be bulging by now. Like some, you can barely make it to the next payday without a short-term payday loan online. However, that is the long-term goal, having a fully-funded emergency fund. Start small by immediately set aside a starter fund, an amount small enough that you can quickly set aside, but big enough to catch those little emergencies.
If your annual income is $40,000, then 2.5% or $1000 is probably enough to start. Some families already have it, while it may take others a few months to scrape up this amount. Don’t take too long to build this starter fund; otherwise, you will be disheartened. Do everything you can to create your fund- sell your stamp collection, do odd jobs or twist and wring your budget – just do it as fast as you can.
Think hard, and make strict guidelines
Once you have the starter fund, remember to use this only for cash emergencies. Christmas is not an emergency; it comes once a year at the same time. Emergencies are the unpredictable events that happen. Layoffs, accidents or injuries are real emergencies. Car repairs and school activities are not. They should have been included in your budget. Think hard, and make strict guidelines as to what constitutes an emergency, and use only when it falls squarely within your definition.
Have strict guidelines before dipping into this fund, and always replace it as soon as possible. Don’t make it easy for you to raid this account. Hide it in a separate savings account. There are banks which offer accounts that limit the number of times you withdraw from it. These type of accounts and provide a higher interest rate than a regular savings account. That is a great hiding place. Where you put it is up to you, just make sure that it does not present a temptation.
The starter fund is a priority, but building a fully funded emergency fund is a process. Satisfy all your online payday loan lenders first before continuing with the fund. When all your payday loan lenders have been paid off, use the money that has been freed up to fund your emergency fund, and keep going until you have saved up 3-6 months worth of expenses. Sock it away in an interest-bearing account that does not penalize you if ever you need to get your hands on it.
Fast online payday loans are for real emergencies. Do not make a habit of using them to get from one payday to another payday. Build your emergency fund so that the next time you go online, you do not get attracted by those payday loans.