Taking out a payday loan is one of the worst financial moves you can make. The typical fees are between 15 and 30 dollars for each 100 dollars you borrow. That may not sound like much, but that works out to between 400 and 700 percent  annual interest! And if you can’t pay it off on time, the fees may be even higher.

That is no way to put your financial future in order.

Ideally, you want to save money for emergencies. Saving just $20 per week means you’ll build up an emergency fund of over $1,000 in a year. That is enough to cover most small emergencies. This is such an important part of financial planning that it is worth selling some stuff in order to save for emergencies.

But if an emergency arrives and you don’t have anything in the bank, there are some steps you should take before resorting to a payday loan.

First, run to your creditors instead of running from them. Our first instinct is to avoid a landlord or the utility company when we don’t have enough to pay them. Instead, try calling them. Say to them, “I’ve had an emergency and won’t be able to pay this bill on time. But I get paid in two weeks. Would it be possible to pay you a little late?”

Plead with them to give you some more time. You may be pleasantly surprised to find that they’ll show you some grace when you have the courage to notify them.

“I’ve had an emergency and won’t be able to pay this bill on time. But I get

paid in two weeks. Would it be possible to pay you a little late?”

But if that doesn’t work, it would be better to use a service like Fig Loans or Red Dough for a short-term loan. They charge much lower interest rates, in the neighborhood of 120% to 190%. That’s still very high, of course, so we hope you never have to use them. But if it’s absolutely necessary, Fig Loans and Red Dough are a better solution than a payday loan. Much better.

Fig Loans Comparison

Red Dough Costs

Not all credit is bad. A mortgage loan (assuming your mortgage is not more than 25% of your take-home pay) is an excellent use of credit. And be careful with car loans. Pay cash or buy a low-cost automobile and save the difference. It can change your future!

Make it your personal goal to plan ahead so that you never have to use a short-term loan to pay for unexpected expenses. Instead, use the money you save on interest and fees to provide a long-term, secure future for your children and grand-children.