Welcome to The Bank of You

Avoid high loan fees by borrowing from yourself.

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  • It’s five days before payday. You go out to start the car, but it won’t start. By the time you get it towed to the mechanic for repairs, you have a bill for $500. If you live paycheck to paycheck, you may not have $500 available. What are your options for paying for this?

  • In many areas, there is a good chance you will find a payday loan store within walking distance of the mechanic’s shop. The staff is more than happy to loan you the money for $15 per $100 borrowed. So, for an extra $75 you get your car fixed. The payday loan store will pay the mechanic’s $500 bill. But they expect you to pay back $575 when you get paid. That’s a big chunk to pay all at once. However, the payday loan store is flexible and will let you take more time to repay the loan. But there is a catch — you’ll need to pay another $15 per $100 you borrowed every time you can’t pay back the money. With all of your other living expenses, it may take you quite a few months before you are able to pay all the money back. It is quite possible that, by the time the loan is paid back, you have not only paid $500 for the car repair, but another $500 in fees to the payday loan store.

  • You don’t have to be a genius at math to figure out that it’s not a good deal to spend an extra $500 in finance charges above $500 in car repairs. Chances are if you use a payday loan it might take you many months to finally pay off the loan. A 2013 Consumer Financial Protection Bureau report revealed that of 15 million payday loans sampled, only 13 percent were paid off within one or two pay periods. Most people took 11 pay periods or more to pay off their loans.

  • To break bad habits, the best choice is to avoid paying high fee loans to begin with, and the best way to do that is to open an account at "The Bank of You." Instead of dealing with the high fees charged by payday loan stores, The Bank of You will give you the money for zero interest because The Bank of You happens to like you very much.

  • In order for The Bank of You to work, you need to save $500 to $1,000 that The Bank of You can let you use whenever you have a surprise car repair, household repair, or minor medical emergency.

  • Before you say that your expenses are too tight for you to find a way to save up $500, remember people who resort to using payday loans are often spending this much or more on fees each year, so you canfind the money. Better to send it to The Bank of You instead of the payday loan store.

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  • Here are three great ways to find money to fund The Bank of You.

  • Sell stuff

  • Unused bikes, boats, clothing, and furniture can always find a buyer at a yard sale. Many people are able to fund The Bank of You from just one yard sale.

  • Extra paycheck

  • If you are paid every two weeks, there are two months of the year when you are paid three times instead of two. Use the earnings from these “extra” paychecks to fund The Bank of You.

  • Use cash envelopes

  • If you are prone to impulse shop in certain spending categories, such as groceries, restaurants, entertainment, and clothing take the money out in cash when you are paid and divide up the cash in envelopes for each category. When you are done spending the cash, you are done until you get paid again. This simple practice forces you not to overspend. It is not unusual for people, who switch to this system, to save up to 15 percent just on food purchases. For many households, that will add up to hundreds of dollars in a very short time.

  • To make sure that the hard earned money you put into The Bank of You remains safe, you should keep these funds in a local bank with easy access. The next time your car needs to get fixed don't rely on an expensive loan. Get the money from The Bank of You.

  • This article was originally published on FamilyShare.com. Check out these other related articles: To B-orrow or not to B-orrow: That is the question, The art of saving money: 5 ways to use coupons (without being extreme) and Finding freedom by living within your means.

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Don Milne is the Zions Bank Financial Literacy Manager. Contact him at www.zionsbank.com

Website: http://www.zionsbank.com

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