Payday loans in Georgia were especially popular amongst residents with poor credit in need of fast cash. Payday lending offices are generally not selective about who they loan money in most cases, proof of employment and a bank account is enough to secure a small loan. What’s more, people can get the money they need the same day they apply for it. This lending arrangement would seem ideal to just about anyone on the outside, but the reality is that the interest rate on the average payday loan is often as much as 600 percent.
The Payday Lending Act of 2004
The Payday Lending Act went into effect in 2004, and it promptly put an end to all payday loans in Georgia. According to the act, lending offices in the state may be charged with felony and racketeering for charging borrowers excessive interest on small loans, typically $3,000 and under. Penalties for violating the act include fines of more than $20,000 and possibly even jail time. It’s no surprise that most payday lending offices in Georgia closed up shop as a result of the act. Georgia is now one of 19 states in the country that no longer allows payday lending.
Borrowers Nationwide Should Steer Clear of Payday Loans
When people are desperate for money, they often fail to see the big picture. Payday loans appear attractive initially to people with bad credit because they need money and have no other means of obtaining it. Borrowing $100 and being told the amount to pay back is $125 doesn’t seem like a big deal, but then there’s another $20 to $25 in interest tacked onto the balance for every $100 borrowed. There’s no denying this ultimately adds up to a lot of money. People who get into the payday loan cycle frequently end up in more severe financial shape than they were to start with when they only needed a few hundred bucks to pay a light bill or something equally minor. Payday lending isn’t worth it, and the fact that Georgia and other states have now banned the practice confirms this.
Here are a few simple solutions to start getting out of debt. Remember, these aren’t suggestions or temporary fixes, they should be new habits that you form and a new mentality that you embrace:
1. Stop Spending on Credit
This one may seem obvious, but people tend to understand the principle but not follow it. Don’t spend anything on credit – only cash and debit. Once you start doing this, it’ll start to feel a little bit more real whenever you start spending money. And once that starts happening, you will see yourself slowly but surely cutting out unnecessary expenses. Do not finance any big purchases and force yourself to wait until you have money in the bank before buying anything. If you start thinking in this mentality, you will naturally spend less than you used to, and start building up some savings.
2. Pay Off as Much of your Debt as You can every Single Month
Every month you don’t pay off your debt, you are further in the hole. Why? Because your interest payment goes up and your credit score goes down. It is a never ending cycle, especially if you pay of your debt by going into more debt. People who make it a habit to pay off their bills every single month in full end up paying almost no interest and up with higher credit scores. These higher scores translate to better interest rates, which means less money paid to credit and finance companies.
A simple tip to reduce interest fees and salvage your credit: If you have lots of different companies you owe money to, pay the minimum balance on each one first. If you have money left over, pay off the smallest bills first, then progressively higher, until you’ve paid them all off.
3. Set a Budget Where you ALWAYS Spend Less Than You Earn
Time to get to basics. If you really sit down and think about necessities, you will realize people can live well on very little money. A roof over your head, a vehicle that gets from point A to point B, and three meals a day. Even if you are the head of a family, all that translates to is extra food. People love to spend when they are out and worry later, but if you look in any house, there are countless items that a person doesn’t use and doesn’t need. Once you sit down and calculate your needs and cut out all the excess, you will find yourself amazed at the monthly allowance needed to live just fine. This will leave you with more money which you can use to pay off debt. You could even start to think about how to save more money.
If you take these three simple rules to heart and don’t stray, you will find yourself with more money in the bank than you’ve ever had (as well as debt free), as well as a new sense of tranquility because you don’t have any urge to spend it. This kind of tranquility and freedom is something that can’t be purchased.…