I Have 10 Payday Loans (Can I Break This Cycle?)

Brought to you by the EveryDollar app. Start budgeting for free today. What's the best way to pay off payday loans? I have 10 altogether. That's a monster, my goodness. I've seen someone call in about them, but never this many. Wow. Let me just ask, how did you get in a situation where you were needing to go to these places 10 different times? I had some car troubles a couple, maybe a little over two years ago, and I needed to pay rent. So there was one down the street from me. So I seen it and I walked in there to try to get a loan and they gave me that. And then it spiraled into getting behind again. So I got, ended up getting another one, then another one. So altogether it's four payday loans where I walk into a store and do it. And then I got stuck with the ones on the apps on the phone. So I got six of those. Have you deleted these apps? I know you're still paying on them, but I'm scared you're going to go get an 11th one. That's right. Yeah, no, I got, yeah, me too. I got all the ones I could possibly get. So for listeners listening, we hate payday loans because number one, most people they're borrowing somewhere from a hundred to a thousand dollars, right? These are small loans, but they're usually due in a very short period of time. Sometimes they're due in two weeks, sometimes they're due in four weeks, but the main kicker. By the next payday, that's where you get the name. The main kicker is guys, the interest rate, the APR on these is anywhere between 300 and 600% many times. But they don't know that because it's just a fee. Oh, it's a $45 fee to get this small loan. And when you actually factor in what that's costing you, no one can get out because the loan grows. It just grows. And by the next payday, you don't have enough to cover it. So it's just whack-a-mole. So that's where James has found himself. You borrow $500, you add the $75 fee, and now you owe $575. That's bananas. So James, how much do yours total? Do you fall in line with this or tell me what yours are? You want me to break them down? I'd love that. The four that I go to in-store, they let you borrow maximum $255, but I have to pay them back $300. So every two weeks, I got to pay that. So that's about $190 every two weeks. So almost $400 just on those two a month. And then the phone ones, I got it written down. The phone ones are just different numbers. The smallest one is $100, and I pay $5 in interest for that every two weeks. And then the next one is $300, and I pay $13 in interest. Next one is $350, I pay $10.50 in interest. The next one is $240, and I pay $35 in interest. And then the next one is $250, and I pay $19 in interest. Oh my goodness. That is... So what's the total balances of all these 10 payday loans? If I would pay them all off today? Yeah. The four are $1,200, and then the other are $1,350. So... Okay. About $2,500 would clear these. Yeah, about $2,500. And do you have any money in the bank right now? I don't. I tried to listen to you guys' steps, like save up $1,000. I tried that twice. I think this is such high interest, I should pay these off. But I saved up $1,000 twice, emergency come up, so I would use that. I think that... How much money do you have to make where budgeting is just optional? If you chose C, watch this. She makes about $170, I make about $115. Hold on, did you go back after you paid off everything, borrow some more money? Oh yeah. Oh no, Carlos. We like to go here and there, and get this Mercedes, and... Oh no, you went full South Beach. It's not just about how much you make, it's about having a plan for what you've got. So start budgeting with every dollar for free today. I think, James, that the baby step is not the issue. I think it's your income that's the issue, because obviously not having the money for car repairs, whatever's going on with the vehicle is what caused you to get into this mess in the first place. And that's also the thing that's holding you back from getting the $1,000 saved and being able to hold onto it. So I'm hearing two issues. I'm hearing a cashflow issue, so an income issue. And I'm also hearing a lack of financial planning issue, which sounds like a budgeting issue. So let's talk about those two things. Do you have a budget? And also, I want to know how much are you bringing in every month as income? I make about a little over $4,000 a month. And is it just you? No, I have a girlfriend also, and two kids. Okay, girlfriend and two kids. And you guys are all living together, it's one household? Yeah, apartment. Okay. Is she contributing financially or no? Yeah, she basically covers all the lights, gas, food, and she goes half with the rent with me. Why is there a huge issue? Because if I'm hearing somebody who is in a shared financial situation, you've got $4,000 a month, you're splitting rent, she's covering all the basic utilities, where's your money going? Tell us more. Tell us about all your other debt. I just have one credit card I pay every month. I have storage, phone bill. Then another big problem I was going to bring up next is I have a car loan that I'm underwater in. How much is... And I'm also behind on... Do you still own that car? Yeah, I still have it. I'm about $12,000 underwater. What's it worth? It's worth about $8,000. Okay. So you owe... You owe $20,000? ...10 and a half, $20,000? Yeah, I owe about $19,000. What's the payment on that? Payment's $530,000. Yeah, that's messing with you. I don't... I just realized just about a month ago, that's why I gave you guys a call, so that I was behind a lot and I didn't know that it's like a big fee of interest when you're late also on top of the other interest. So it was basically like a little over $150,000 in late fees every month occurring. What about your rent? What are you guys paying in rent? Because still, I'm wondering where this money is going. It's $1,800. That's your half or that's the full amount? That's the full rent. Okay. So yeah, we've definitely got to find out where your money's being spent. So second question, do you have a budget? I'm guessing no. I tried the budget with the app, but it's just so confusing with all these other fees and other stuff. Okay. So what I want you to do, I want you to give it another shot because I think you just need a little help tweaking it. When it comes to the fees and everything, just plug in the minimum payments. That's all you need to do. There's a section, you list all of them out. It'll ask you what the minimum payment is that you pay. Just fill that in. And then from there, we can figure out how much margin you actually have. Because I think that you have more than you think you have. And then we can see a full number because the way we want you to tackle this is with the debt snowball, which means you're only paying minimum payments on everything. And then smallest to largest, we're taking the very smallest debt and all of our extra money goes on the smallest debt. So therefore, while it's going to feel like the others are struggling because they are, and you're going to feel it because these are payday loans, you're just going to see the balance go up temporarily. But you're going to feel great when you knock these payday loans down from 10 to 9 and from 9 to 8. And you're just going to have some stupid tax that you're going to feel in way of interest. But the key here, James, is you need to throw more money at it than the balance is accruing, which means you need to get aggressive. That next paycheck needs to go mostly towards these debts so you can stop playing the shell game and whack them all. That's the only way out is you got to be more aggressive than they are. And then, you know, never touch this hot stove again. Delete these apps. Never walk into one of those stores. You drive by and say, that's a past version of James. Never again. And you're probably going to need to pick up a couple of side hustles. You're going to have to work extra to get this done quickly. Create your free every dollar budget today. The simplest way to budget for your life.