You mean it’s not all sunshine and light?
You were maybe expecting trumpets to sound when you got your loan? We need to keep all borrowing in perspective. You are in a bind right now. How did you get there? Let’s assume that it’s not your fault. You’ve just been unlucky that some big bills have come along and you can’t avoid the liability. The result? Your pay is not enough to cover the total amount owing. You don’t have enough saved and put to one side. You don’t have a credit card or, if you do, it’s close to the maximum. That means your only asset is your pay.
Let’s keep this real. You’re going to have to make like the swan on the lake. Above water, you see only gentle movement. Underneath, those webbed feet are paddling away to move against the current. With this new debt, the current has turned against you. You’ve got to juggle more liability with the same income. That means adjusting the timing of some of your other repayments so that you can work through a sequence of instalment payments without losing your way. If just one repayment misses, you could find yourself swept away by the current.
What is this current? It’s the interest payments and penalty charges that can suddenly hit you like a wave if you default on any of your current liabilities. Staying with the payday loan and leaving bank and credit card charges to one side, let’s say you borrowed $200 for two weeks. The repayment may be $230. That’s not too bad is it? So what happens if you don’t have enough in your account when the lender comes to make the deduction? Well, the loan is rolled over and the amount repayable in two weeks time is now $260. That’s $30 for every two weeks you add on. Do the math! How quickly are you going to owe double what you borrowed?
To make the whole plan work, you have to keep everything under control. You have to know where every cent of your money is at any moment in time so you can meet your obligations when they fall due. If you don’t, your borrowing swan will be swamped as all your creditors start to impose their charges for missed payments.