Understanding the Payday Loan Cycle

The payday loan cycle begins innocently enough. You experience an economic hangup or an unanticipated expense and apply for a payday loan. These loans are designed to tide you over until your next paycheck, yet they carry hefty interest rates that can reach 500% APR or higher. Unable to pay off the loan in full with your next paycheck, you’re drawn into a cycle of continually renewing the loan with yet another fee.

The Importance of Responsible Borrowing

Breaking free from the payday loan cycle demands an understanding and commitment to responsible borrowing. Having the information necessary makes it easier to resist the temptation of easy money and remember the eventual cost. Responsible borrowing, in essence, is about only borrowing what you need and can afford to pay back within the stipulated period.

Strategies to Break the Payday Loans Cycle

Create a Budget and Stick With It

Creating a budget is an essential first step in managing your money effectively. Your budget should be honest and realistic. It should account for all your income and every one of your expenses. This way you can have a clear picture of your financial status and avoid unnecessary loans.

Build an Emergency Fund

An emergency fund serves as a financial buffer and can effectively keep you away from loans. By setting aside a small portion of your income every month, you can gradually build an emergency fund that can bail you out of unexpected financial hitches.

Consider Alternative Options

Before resorting to payday loans, explore other alternatives. These can include personal savings, borrowing from family or friends, credit unions, or a loan from your bank. Personal loans from most financial institutions often come with affordable interest rates and longer repayment periods compared to payday loans.

Seek Credit Counselling

If you’re struggling to break the payday loan cycle, consider seeking help from a credit counselling agency. These agencies can help you devise a manageable budget and debt repayment plan. They can also offer advice to improve your financial situation in the long run.

Conclusion

Breaking the payday loan cycle starts with responsible borrowing. This shift may be difficult initially, but with proper planning and adherence to a budget, it’s possible to stop borrowing and start saving. Every step taken towards responsible financial management is a significant stride towards financial freedom.

The post Responsible Borrowing: Breaking the Payday Loan Cycle appeared first on Mobile Marketing Watch.

Verizon Wireless and AT&T Mobility, the two largest operators by subscribers in the US mobile market, announced price cuts of up to 30% to remain competitive with lesser used, low-cost cellcos like MetroPCS and TracFone, starting today. Both companies are reducing their $100 per month unlimited voice plans with $70 per month alternatives.

Digging deeper, there may not be such a huge difference in cost for AT&T and Verizon customers. Verizon recently increased charges for heavy data users and now requires all 3G phone users to sign up for a $10 per month data plan.

Reduction in monthly fees for smartphone plans will continue to spark smartphone adoption. Verizon requiring 3G phone users to sign up for data plans effectively pushes users to buy a more feature-filled smartphone, for a slightly higher monthly fee. Over at AT&T, iPhone customers landed a good deal, with the new $100/month plan for unlimited calls and data. As monthly fees creep down, smartphone adoption will continue its climb.

The post Verizon & AT&T Slash Unlimited Voice Plan’s Monthly Bill appeared first on Mobile Marketing Watch.

Verizon now claims the 3-cent hike on outgoing text messages is just an idea. And besides, the carrier says, it would only affect aggregators, so it’s the aggregators’ fault if everyone else gets that price increase passed onto them.

That’s what it boils down to, though you have to slog through a lot of pretty words (“our friends in the nonprofit and public policy arenas”) to figure it out. Ugh. If you can stomach it, here’s the statement:

“As Verizon Wireless continues to review the competitive marketplace, we constantly work to provide additional value to our customers, employees, and other stakeholders.

“We are currently assessing how to best address the changing messaging marketplace, and are communicating with messaging aggregators, our valued content partners, our technology business partners, and, importantly, our friends in the nonprofit and public policy arenas.

“To that end, we recently notified text messaging aggregators — those for-profit companies that provide services to content providers to aggregate and bill for their text messaging programs — that we are exploring ways to offset significantly increased costs for delivering billions upon billions of text messages each month.

“Specific information in one proposal, which would impose a small per-message fee on for-profit content aggregators for commercial messages, has been mistakenly characterized as a final decision to implement. We don’t envision this type of change to in any way affect nonprofit organizations or political and advocacy organizations.

“We have not increased the per-message cost to aggregators since our messaging service began in 2003, and we have never envisioned a cost to consumers or content companies, but rather on content aggregators themselves. That draft was intended to stimulate internal business discussions and in no way should have been been released to the public and represented as a final document.

“At Verizon Wireless, we strive to provide our messaging customers with maximum value, and work to implement business decisions that encourage the use of messaging between individuals and organizations in both the marketplace of ideas and the commercial marketplace, and we will continue to strongly encourage the use of our services by charitable organizations as they perform their good works.”

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Effective November 1, Verizon will increase the per-message price for sending texts by 3 cents. The move will ultimately double or triple the cost for marketers who send messages to opted-in subscribers, considering that marketers currently pay an average $0.025 per message sent.

“I have one word to say in reaction,” Forrester analyst Neil Strother said. “Ouch.”

Mobile marketing professionals everywhere were scrambling to make sense of the rate hike, in some cases holding emergency meetings to decide how to cope. While many are going to demand further explanation from Verizon, I have to wonder about the long-term effects on the mobile marketing industry. Could other carriers follow suit? Who will end up paying? Could this lead to all content becoming premium content–that is, that is content that people pay extra to receive?

First, it’s important to figure out specific reasons for Verizon’s move. Mr. Strother noted, “We have seen a huge explosion of the use of SMS in the United States–not just among consumers but with so-called ‘app-to-person’ messages–you know, things like text alerts.” Thus, it could be that it’s costing Verizon too much to process all these messages. In other words, mobile marketing might have been too successful.

But another expert doesn’t think so. “They clearly want to continue to control their network as much as possible; they probably want to get rid of as much off-deck stuff as possible,” said Jared Reitzin, CEO of mobileStorm, a digital messaging solutions provider. “It shocks me they would do this, especially after Congress is looking into the possibility of carriers falsely ballooning text message pricing to consumers,” he said. He was referring to recent U.S. Congressional inquiries–not to mention consumer lawsuits–regarding the increase in per-message texting costs by all carriers.

Because all cellular providers are under scrutiny already, it wouldn’t be surprising if competitors said, “What the heck,” and throw in their lot with Verizon. “My take is, they will follow suit if Verizon is able to hold this price,” Mr. Strother said. Mr. Reitzin added, “Could they be colluding to drive up revenues? It is possible.”

Both experts, however, indicated that other mobile providers would be better off not doing this. Rival carriers could differentiate themselves from Verizon and perhaps steal its market share, especially if consumers end up paying for part or all of the added fee. (Investors didn’t seem to approve of the move; Verizon Communications shares were down 6.49 percent to $25.93 when the market closed Thursday.)

Sure, marketers’ high SMS usage could have affected Verizon’s decision. But they shouldn’t be punished. “At mobileStorm we have worked hard for almost a decade to advance this industry. Mobile is starting to really take off,” Mr. Reitzin said. Indeed, consumers have become more reliant than ever on their cell phones, using handsets instead of computers to go on the Internet or stay in touch with not just voice and SMS, but also MMS, mobile email, and mobile IM.

“Do they really want to kill this momentum? Carriers need to be very aware that they could hurt the industry and themselves,” the CEO said.

mobileStorm, and probably other mobile content and mobile messaging companies, is going to have to raise its prices for all text messages that clients want to send to Verizon phones. True, it’s possible to ultimately pass this cost onto consumers, who Mr. Strother said are already getting used to paying for “premium” SMS like sending vote texts into their favorite TV shows. But there’s one more option for marketers: Shut Verizon off completely.

Heck, that would get Verizon-subscribing consumers–those who want to receive messages from their favorite brands–angry enough to complain, too.

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