You may have the best intentions of paying back a loan but sometimes life happens. Things pop up, or an emergency happens, and that payment doesn’t seem as important anymore. If this happens once or twice, late payment fees are added and the loan payments begin to snowball. Soon you find there’s no way to get caught up. But there are ways to plan and ensure that the money for the payments is there and the loan will be repaid.
Open a separate savings account. Decide how much you need to deposit every payday in order to have the dollar amount needed before the payment is due. If the payment is $100, put $25 per week into the account. This equals about $3.33 per day. Look for a savings account that does not charge a monthly fee. It can be the same bank that has your checking account or a different one. Using the same bank will allow you to transfer the amount you need every payday from checking to savings but you also have easier access to use the money and not have it available for the payment when it’s needed.
Saving the Money
If it seems you don’t have $3.33 a day to put in, look for ways to cut back on extra spending. Instead of going to the movies, rent the DVD and have a family night at home. Newspapers are another way to save. Get the Sunday paper only. The Sunday paper is usually a summary of all the happenings during the week plus additional news and features. Pack your lunch for work 2 or 3 days a week. You’ll find that there is extra money you can put in the savings account.
Ask your employer or the payroll department of your employer to make deductions from your paycheck that will equal the amount of the payment. The amount can be added to your pay just before the payment is due or a separate check can be issued. Have your employer write out the check to the loan company. If you use direct deposit, have your employer split the money between your savings and your checking account or put a certain percentage in the savings account.
Purchase Money Orders Every Payday
A third alternative is to purchase postal money orders every payday. If you are paid weekly purchase $25 money orders each week, write them out to the loan company and save them until you have the payment amount. Likewise, if you are paid bi-weekly purchase $50 money orders. Writing them out to the loan company when you purchase them helps avoid you cashing them in before it’s time to use them for the payment. Postal money orders can be cashed back in but do so only if it’s a serious emergency.