Payday Borrowing Pokes a Hole in Your Pocket, pt. 2

What You Save
Using a short-term credit union loan instead of a payday lender can generate significant savings for members. Costs and services will vary, based on the credit union's program and state laws.

Credit unions in some states are working together to establish short-term lending programs to deliver alternatives to more members.

Other Options
If you have a payday loan, it's time for drastic action.

Other solutions for meeting money shortfalls or repaying loans include reducing expenses by taking a hard look at what's a necessity and what's an extra; selling possessions that aren't being used and generating extra income with a second job or overtime hours.

Setting Goals
Take a look at the costs or events that prompted your need for quick cash and figure out another way to handle them.

You can change that approach by asking your credit union about programs that help you establish savings or even automatically deposit some of your earnings directly in a savings account.

Another option many credit unions offer is a "goal setter" account. Sometimes called Christmas club accounts, these savings programs help members set aside a certain amount every month to be ready for a specific event, such as the start of the school year.

A Long Term View
It's also important to examine your needs for a full year, rather than month by month, which should motivate you to start saving now for emergencies.

While it may be impossible to predict when a refrigerator will break down or an aging vehicle will finally shudder to a halt, it's reasonable to assume that over the course of a year, breakdowns will test your budget.

Equally important, you can ask a credit union staff member about ways to improve your credit score, which helps you qualify for loans with better terms and lower costs so you can stay out of the payday lending trap for good.