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Get Out of Debt

How To Pay Off a Debt Before It’s Too Late

Last thing I ever imagined in my life was to be nose-deep in debt at the fresh, young age of 27. At a time in life when my friends of the same age were planning dream weddings, backpacking through Europe or were gushing about getting a career-making job, I was crying in front of numerous unopened envelopes with big, red “DUE” stamps on them and wondering how to pay off a debt that was going to ruin me.

On the morning of my 27th birthday, the first call I got was from a creditor. He didn’t beat around the bush. He told me up front that he would sue me if I didn’t start paying back what I owed. Here’s the thing. I was not struggling to pay back a federal student loan, a mortgage or even credit card debt. I had missed several payments to a payday loan shark. Yes, I know. It doesn’t get worse than that.

How Did All This Begin?

Right out of college, I thought I was lucky to have landed a stable 9 to 5 job that did not pay minimum wage. I did owe some money to Fannie Mae for a student loan. But it was perfectly manageable with my salary. The only downside at the time was that I didn’t have much money left after I paid my monthly bills. I was a bit vain back then. I wanted new shoes and a fancier car. So I took out a car loan, and my monthly disposable income went down even further.

I thought I had found a solution to my money problems when I found this payday loan site online. This was back when such sites weren’t regulated. They made taking out and paying back a payday loan so easy. I told myself I was only borrowing a small amount, like $300, per month, so it would be so easy to pay back soon enough. I never bothered to calculate the interest rate, which can rise well over 500% annually.

Suicide Was an Option for a While

So, yes, I ended up owing thousands of dollars to a legal loan shark who threatened to put me in prison. Believe me when I say I wanted to end it all. But, instead, I decided to face everything head on. I called a lawyer and asked for legal advice. The lawyer directed me to a nonprofit debt counseling service. I found a counselor who helped me put together a monthly debt repayment plan, which was probably the best advice on how to pay off a debt I had received so far. She even gave me numbers of other people who were in debt like me and wanted to talk.

I considered debt consolidation, but it would have required a monthly lump sum that was too much for me. I considered taking out a loan to pay off the payday loan debt. That’s of course how I had ended up in this mess in the first place—by taking out payday loans to pay off other payday loans. This is definitely not how to pay off a debt. My lawyer said the law was on the lender’s side for my case, so a lawsuit was out of the question. Everything seemed to go downhill until the Thanksgiving of the year of my 27th birthday.

I Didn’t Know How to Pay Off a Febt Without Help

I couldn’t take it anymore so I broke down and confessed everything to my mother and aunts. They were pretty mad at first, but then started crying with me. Luckily for me, my mother and aunts put their funds together and gave me a loan big enough to pay off the payday loan debt. Once that was off my back, my finances snapped back into shape.

I want everyone to take this personal account as a precautionary tale about how to pay off a debt from payday loans. Don’t ever believe anything a payday lender tells you. Understand payday loans for what they really are—exploitative (especially that sky-high interest rate). If you are in a desperate situation financially, never consider payday loans as the first option. Try to get a cash advance from your employer, borrow from a friend or do anything else except take out a payday loan.

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Erin Thompson

Erin Thompson spent years managing her own blog about budgeting and debt. Because of that, she has great insights not only about managing spending and borrowing but also about running websites profitably. When she's not writing articles for us, she's traveling and looking for new types of wines to try.
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