We speak with DebtHelper.com's Kevin Maher.
Photo: Thinkstock
This is part 1 of a cautionary tale involving those payday loans that you see advertised everywhere. Kevin Maher, Community Outreach Coordinator with DebtHelper.com tells us that's an easy way to fall further into debt.
"Even in the state of Florida where we have regulation on it, they can charge ten percent, but that is over two weeks, which effectively is 260 percent annually."
If you know someone struggling, Maher says it comes down to creating and managing a budget so they don't wind up at a payday lender. He says creating some savings is key.
"It starts at the beginning, paying yourself first and putting a little bit back every paycheck, just to hedge that possibility, 'cause things are going to happen. If you're budget is essentially month to month, you're setting yourself up to have to pay too much to borrow money."
For folks who are already in too deep to start saving, a debt managment service can help them consolidate their credit card and other debt to make one do-able monthly payment and start knocking down what they owe.
Maher says it's easier to avoid debt to begin with than to fix debt. He says parents should be teaching their kids about saving money.
"This starts early...it really comes down to trying to education at high school and even before that to have savings happen."
Here's an example of a lesson plan for even younger kids:
"Let them understand that money doesn't grow on trees. You can start before they have their first job. They have an allowance. The kid wants a pair of Air Jordans (shoes), well 'here's how much it's going to cost and here's what you're going to have a week to save up for it. Now, you can either blow that on candy or you can save up for these Jordans. Which one is more important to you?'"
Next week, we'll talk to Kevin Maher about the deceptive and potentally illegal practices of payday loan companies.
For more information about DebtHelper.com, Click Here.
