I am a firm believer in budgeting. Sitting down and working out exactly how much money you have and what you need to spend it on each month. I have a huge spreadsheet that I’ve been tracking all our monthly incomings and outgoings in for years now and it allows me to keep track of everything. To work out whether I need to find any extra money in a month or whether we can afford to save up for something. Yes, it takes time each month to do that and I do resent having to sit down and work my way through bank statements and make everything balance when I’d much rather be doing something else instead, but it’s a necessary job. (Even if I am a couple of months behind at the moment – shhhhhh…)
The thing is though that even with the best budgeting in the world, unplanned expenses can crop up, and the law of sod says that they’re often when you least expect them. Chances are that if your car breaks down then your washing machine will also die a death in the same month. Or at least that’s the way it always seems to be in this house. Or you’ll just have spent your savings on something big like a holiday, and then just days later the boiler will break and the plumber will tell you it’s terminal.
What do you do in situations like that? With prices rising and incomes being pretty much stationary everyone is tightening their belts and building up enough savings for a rainy day isn’t always possible. Or you just manage to save up for one rainy day, not the week of rain that sometimes happens.
In the past payday loans were something that I always stayed away from. There were so many horror stories in the press about them yet I then, slightly ironically, got talking to a consumer journalist at a wedding. She told me how she’d actually taken out a payday loan before to get her from one month to the next when some unexpected expenses had cropped up – in her case suddenly needing to take some time off work to visit a sick relative overseas.
This conversation made me look at them with a fresh pair of eyes, especially after then also reading a news article showing how unauthorised overdrafts can actually be more expensive than payday loans. This woman knew that she could pay off the loan completely when her pay cheque came in, but also knew that she had no other way of meeting the expenses she had without it. She did all her due diligence and worked out that it was the best thing for her at the time.
To work out what is best for you financially, it depends on your exact circumstances and what you have set up with your own bank or building society. The key message though is not to dismiss short term loans straight away. Have a look at what a company like Vivus can offer you and make sure you do your homework. You could borrow between £100 and £500 between pay cheques to help you until your next pay cheque comes in. It may be the best way to cover those unexpected extra costs that a rainy day can bring.
British coins image via Shutterstock.