-Editorial by Leilehua Yuen
Some of us are good at earning money, but then it seems to dissappear as fast as we earn it! Learning how to manage our money is crucial. Why don't that teach that in schools? It would fit perfectly into Maths classes, and kids would actually see the correlation between maths literacy and financial well-being!
One of the things we need to remember is that those credit cards are NOT FREE MONEY! Essentially, every time you use a credit card, you are buying the use of someone else's money by promising to pay them back even more of your own money. Sometimes this can be useful and helpful. But if we are not careful, we can end up owing far more than we can ever repay, and fall deeper, and deeper into debt.
One of my most useful tools for managing my credit is the credit tracking website, Credit Karma. The site has FAQs, helpful tips, and lots of information on how to manage your credit to benefit YOU, rather than the banks. It's also an easy way to keep tabs on your cards and loans if you have more than a couple. Another great thing about a site that tracks all of your cards, loan inquiries, etc., is that if someone gets hold of your ID and tries to take out cards or a loan using your info, it will show in the weekly credit update, and you can track it down right away.
Here is a great article by Penny Hoarder. The person in this interview uses a different tracking site, but the principles are the same.
I have absolutely nothing good to say about payday loans. The best of them, in my experience, take terrible advantage of people who can least afford it.
My only personal use of a payday loan company went like this:
I was in Honolulu on a business trip. My colleague left a day before I did, and took the company credit card with him, after closing out the company bill for the hotel rooms. I had thought my room was still open, but no. He had closed that out, too. While trying to sort this all out at the hotel front desk, my purse was stolen. My cash, credit cards, everything except my ID was gone. Fortunately, my boss had given us our week's paychecks before he flew out, and mine was in my briefcase, which I had been holding with a death grip during the conversation. My ID had been in my hand.
Without a valid credit card, the hotel was not about to let me have a room, even if I gave them my paycheck to hold.
I could not cash the check because it was Sunday, and the banks were closed. I wandered out, looking for a safe place to spend the night. The only place available was the local YMCA. But I had to have cash and pay for the room up front. They pointed me to a payday loan outlet. There, I was able to cash my paycheck.
It cost me $87 to cash a $500 check. That was not a loan against a future check. My paycheck was not drafted on some fly-by-night institution. It was with a reputable bank, and the company was a reputable internationally recognized company. My credit was spotless. I was earning (for the time) good money. And they charged me 17.4% - almost a fifth - of my paycheck to cash it. That is sheer usury.
Go to your local credit union and talk with their financial advisor about how to manage your paycheck before you go to a payday loan company.
Here are some articles on payday loans: