401k Rollover Answers

It seems like they’re on every street corner — payday advance loans stores. There are even online payday loans to be had! The sluggish economy is part of the problem, but our easy credit culture is another part of the problem. Lack of education about money is the biggest part of it all. People don’t necessarily understand how to mange their money and they let their impulse for new things rule their lives, quite literally.

Same day cash loans can seem like a god-send when you get one, but then the fees start racking up. For every day you don’t repay the loan, the amount due cranks up. They keep the loan amounts small (which makes sense since they are usually unsecured loans) and the repayment schedule tight. Otherwise you would realize that the interest rate is 400%! You borrow $100 for 5 days and you owe back $135! This is not a good use of your money.

Same day loans are a symptom of our failure to teach children basic money management skills. If we taught kids how to balance a checkbook or about how to budget for a month’s worth of expenses, we would have far fewer cash loans places taking up space. Elsewhere I talk about managing your money a little bit, but since the focus of this blog is using a 401k account to fund retirement, I don’t harp too much. Today seems to be the exception.

There is something fundamentally wrong with payday loans. “Same day service” the ads scream. But they don’t talk about what happened before and what will happen after. All that matters is that in this moment you have $100 in your hand. What can $100 buy you? It might be the difference between keeping your car or your apartment. It might keep the lights on or buy some groceries. Who could argue with that? That does not mean, however, that the very concept of a cash loan at 400% interest is a good thing.

Payday advance loan places are keeping people in a cycle of slavery. They are slaves to their debt. Many people are slaves to their debt and not all of them use a same day loan service, of course. But using your Citibank at 15% interest is slightly better than using Kwik Loan at 400% interest. You can break free from debt. Does it take time? Yes. Is it tough sometimes? Yes. Is it the best thing you could ever do to improve your life? Yes.

Getting out of debt is not my specialty, by any means. When friends ask me, I send them to Dave Ramsey. He’s a no-nonsense guy and I appreciate his advice. It is simple and actionable. If you follow his suggestions, you can break out of the chains of debt.