Tuesday, July 14, 2020
Avoiding Payday Loans How to Deal With a Bounced Paycheck
Avoiding Payday Loans How to Deal With a Bounced Paycheck Avoiding Payday Loans: How to Deal With a Bounced Paycheck Avoiding Payday Loans: How to Deal With a Bounced PaycheckCan a paycheck bounce? Unfortunately, yep. It does happen.If your paycheck bounces or your employer is late with a payment, it can mean financial disaster. Here are the steps you can take to fix the situation, as well as savings strategies to make sure you have the funds to make it through.If youâre one of the millions living paycheck-to-paycheck, then what would you do if your next paycheck happened to, well, just not show up. Or worse, it does show up, but when you go to cash it, you get the four worst words in the English language: âTransaction Failed, Insufficient Funds.âWhat are you going to do now? Do you have enough money in your savings account to deal with a delayed paycheck?If you donât know the answers to these questions, donât worry. Thereâs no need for you to run over to your local payday lender and take out a short-term, high-interest loan thatâll put you in an even deeper financial hole.Instead, ju st keep reading.1. Talk to your employerNothing shakes your faith in the American enterprise system like a bounced paycheck,â says Howard Dvorkin (@HowardDvorkin), CPA and Chairman of Debt.com (@debtcom).âIt happens most often in small businesses, and many times, itâs not only unintentional, the employer is rightfully embarrassed as hell.âDvorkin says that your first step should be to âcall your employer and politely inquire. You just might get a horrified apology because someone forgot to do something important.âAccording to Roslyn Lash (@RosLash), an Accredited Financial Counselor and the founder of Youth Smart Financial Education Services, you should want to âmake sure that the money wasnt incorrectly transferred or some type of computer glitch.ââTherefore,â she says, âyou need to call your employer and explain the situation and inquire about a reissue date.â2. Start a Paper TrailIf your bounced paycheck does turn out to be a simple error, then youâll pr obably be fine. But if itâs something elseâ"if your employer is maybe up to somethingâ"then youâre going to need documentation. Youâll need to not only document your lack of a paycheck, but your efforts to resolve the issue.âIf you contact your employer and you get an attitude, start a paper trail,â says Dvorkin. âGet a copy of the returned check, and keep copies showing if you had to pay overdraft fees.âAccording to Lash, when people with a bounced paycheck contact their employer, they should âbe sure to document the name, location of the representative that they speak with. This will be the beginning of the paper trail,â she says. âFrom this point forward, every conversation and everything and I mean everything should be documented.â3. Call Your BankMost people plan their bill payments around their paycheck. But when a paycheck bounces, that plan has got to change.Contact your bank to have all drafted automatic payments from your account canceled.â says L ash. âExplain the situation to the bank representative and request proof that your paycheck was not deposited into your account.ââAny documentation that they can provide proofing that the employer had insufficient funds or that the check bounced would be helpful,â she says.Lash also recommends that âif you have an emergency savings, transfer some funds into this account to cover any outstanding bills.ââAsk your lender if there are any provisions made for NSF fees that you may incur,â she says.4. Contact your creditorsPeople tend to think that lenders are totally inflexible when it comes to your payments. And while itâs true that most lenders arenât pushovers, and they donât like it when people are constantly calling in about insufficient funds, they do understand that (and this a very technical banking term) âstuff happens.â The same goes for utility companies.Lash says that you should call your lenders and âAdvise them of the situation and request a pa yment date change.ââExplain that you expect to be paid by date (whatever date that the employer advised you) but you will keep them abreast of any changes.âIf you have already incurred a delinquent fee, she adds, ârequest a courtesy removal.â5. If you need to, then lawyer upIn cases where you arenât able to get the situation resolved immediately, then youâre probably going to need an attorney. (Also: a new job.)Lawyers can be expensive. For someone with a low-income, especially someone whoâs now not even receiving that income, a traditional lawyer might be out of the price range.This is is why both Lash and Dvorkin recommends contacting your local Legal Aid office. If you qualify for free legal aid, they should be able to set you up with a lawyer.âMeanwhile, if you want to get your employerâs attention, report him to the Department of Labor in your state,â says Dvorkin. âThere are laws about these things, and you can file a complaint.âTry These Savings Stra tegiesOf course, if you arenât able to get your paycheck issue resolved quickly, then youâre still going to need money. Even if you are able to find another job, itâll probably be a few weeks before your paid. In the meantime, how are you gonna eat?This is where a payday loan might start looking like a pretty good option. But stay away. The extremely high APRs and the short repayment terms can all too easily lead to you rolling the loan over instead of paying it off on time. Thatâs how the dangerous cycle of debt begins.Instead, the best way to manage this situation is to have money in your savings. This way, you can bridge the gap without having to pay any additional fees or interest.Saving money does take some extra work and disciplineâ"especially if youâre someone with a low-income, but there are definitely ways you can make it work.Kendal Perez (@HassleFreeSaver)is the Savings Expert for CouponSherpa.com (@CouponSherpa). Here are some of her tips for building your sav ingsHack your recurring expenses: âThe most effective way to build your savings or emergency fund is to reduce your monthly payments and direct the difference to your savings accounts. Its a good idea to regularly review these expenses anyway to ensure youre not overpaying. Good candidates for review include cable TV and internet bills, mobile plans, auto insurance policies, and subscriptions. You can opt to swap your cable TV for a Netflix and/or Hulu subscription; decrease your data plan based on usage; increase the deductible on your auto insurance policies to drop your monthly premium, and review the subscriptions you pay for and start making cuts. You can also use a service called Trim to review and cancel unused subscriptions on your behalf.âLimit your splurges: âIf youre prone to buying coffee or dining out for lunch each week, start cutting back on these treats and deposit what you save into your emergency fund. Cutting out these purchases entirely may lead to burnout, so select a day or two during the week or month to treat yourself. Limiting your splurges to Fridays and paydays only, for example, strikes a nice balance between enjoying your money now and saving for the future.âAutomate your savings: âPaying yourself first means placing a priority on your financial wellness and security. This can be accomplished by setting up an automatic transfer of funds between checking and savings every time you receive a paycheck, or at any increment you choose. You can also use a tool like Digit which reviews your daily spending and makes small, incremental transfers from your checking to an online, FDIC-insured account.âSell your stuff: âWhile reducing your spending and saving money is an important part of building an emergency fund, so too is adding to your income. Tis the season to spring clean and declutter, so consider selling your stuff at a garage sale, or through Craigslist or Facebook community groups, and deposit your profits into savings .âAttempt a no-spend challenge: âThe more adventurous savers can try a no-spend challenge, whereby you try to purchase nothing for a certain period of time (one week, one month or even one year). The money you save by limiting your spending can go toward building your emergency fund.âHopefully, you will never have to deal with a bounced paycheck. But if you do, follow these steps and youâll weather the storm just fine.Have your own tips for dealing with bounced paycheck (and avoiding dangerous payday or bad credit loans)? Let us know! You can find us on Twitter at @OppLoans.Visit OppLoans on YouTube | Facebook | Twitter | LinkedINContributorsHoward S. Dvorkin (@HowardDvorkin) is a two-time author, personal finance expert, community service champion and Chairman of Debt.com (@debtcom). As one of the most highly regarded debt and credit expert in the United States and has played an instrumental role in drafting both State and Federal Legislation. Howardâs latest boo k âPower Up: Taking Charge of Your Financial Destinyâ provides consumers with the detailed tools that they need to live debt free and regain their financial freedom. Howard has appeared as a finance expert on CBS Nightly News, ABC World News Tonight, The Early Show, Fox News, and CNN.Roslyn Lash (@RosLash) is an Accredited Financial Counselor and the founder of Youth Smart Financial Education Services. She specializes in youth financial education, adult coaching and works virtually with adults helping them navigate through their personal finances i.e. budgeting, debt, and credit repair. Her advice has been featured in national publications such as USA Today, TIME, Huffington Post, NASDAQ, Los Angeles Times, and a host of other media outlets.Kendal Perez is the Savings Expert for CouponSherpa.com (@CouponSherpa), a popular source for online, in-store and grocery coupons. Her money-saving tips are often featured on Bankrate, GOBankingRates, US News World Report, Wisebread a nd more. Kendal can be found on Twitter @HassleFreeSaver.