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Breaking the Cycle

Wednesday, November 3rd, 2010

If you’re like most people who have taken out payday loans, you already know that it’s easy to find yourself caught in a vicious cycle of loaning and reloaning. When we live paycheck to paycheck, there really isn’t much else we can do to deal with emergencies when they come up. Or is there?

Here’s the part where you probably think we’re going to tell you that there is something else you can do. Unfortunately, as long as you continue to live paycheck to paycheck, there really isn’t. Unless you’re willing to significantly change your way of thinking, you’re going to be caught in the payday loans cycle for a long, long time.

So, are we saying there’s nothing you can do? Of course not. But here’s the thing: if you ever want to get out of the cycle of taking out every time an emergency hits, you first need to get out of the habit of living paycheck to paycheck. And that’s not easy for most of us to do.

It isn’t easy, but it is possible. It takes a lot of discipline. But in the end, it’s worth it.  Hopefully you’ve already passed the point where you’re saying, “I’ll do anything as long as I can get out of this hole.” If not, you’ll get there soon enough.

In the end, it comes down to a decision to start living within your means. And if you’re truly living within your means, that means that you’re curbing your spending enough to put some money aside for savings. Don’t think you can do it? You can. We know you can. Here’s what you do:

  1. Figure out 90% of your income. This is the amount of money you have to spend on rent, groceries, car payment, and anything else you might need on a regular weekly or monthly basis.
  2. Put the remaining 10% into an emergency savings account. Then, leave it alone. Don’t touch it. We know that it’s hard. Leave it alone anyway. The only reason to touch this money is if you have a genuine

See, it really isn’t complicated. You may think that you need ALL of your income to live. But, truth be told, you probably spend much more than 10% of your income on impulse purchases (things you hadn’t planned to buy beforehand) anyway. Trust us; put the money in the bank on payday, and you’ll never miss it.

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