4 of 12

Write now Article Tools

Page 2 of 2

Banks don't like to lend to people with unstable employment. So, once you leave your job, getting your money out of your home again with a new loan will be difficult.

* Refrain from using credit, but don't cut up the cards just yet. After your current employment ends, getting credit if you need it, will not be easy. If you reach a point where you need help to buy groceries or cover the utilities, a credit card (even with a high interest rate) is a far better option than a payday loan.

* If you've thought of using retirement savings to get by, reconsider. The penalties for early withdrawal of retirement savings are too high to justify this approach versus using credit. Also, typically people do not replenish their retirement savings, much less make up for the tax free interest that money could have been earned.

* If your situation is desperate, you may have considered taking a payday loan. Don't do this, even if the only alternative is borrowing from family or a friend (always draw up an official contract). Payday loan companies are in the business of luring you into a continuous cycle of ultra-high interest debt. A 2006 study by The Center for Responsible Lending showed the national average annual percentage rate charged on payday loans was about 400%. Additionally, 90% of payday loan profits come from borrowers who cannot repay on time.

Which ever tips you use while you tighten your budget, one thing is sure: putting your financial priorities and cash expenditures in order will help take your focus off of money worries and put it where it should be - on your new job.

Source:

* King,Uria, Leslie Parrish and Ozlem Tanik.Financial Qucksand: Payday lending sinks borrowers in debt with $4.2 billion in predatory fees every year.30 Nov 2006.Center for Responsible Lending.24 May 2008.http://www.responsiblelen ding.org/pdfs/rr012-Financial_ Quicksand-1106.pdf

Learn more about this author, Ysabel J. Doran.
Click here to send this author comments or questions.

• << previous page
• 1
• 2

Add your voice

Know something about Financial priorities during a job transition: Save money or pay off debt??
We want to hear your view. Write now!