40 Great Savings Tips to Help You Avoid a Payday Loan

In 2020, the ASPE put the poverty threshold the year at $12,760 for a single adult under the age of 65 and $26,200 for a family of four. 

There is nowhere in the United States that a single individual can afford to live on just $12,760 per year (or $1063.42 per month). It’s no wonder that so many people are desperate for any sort of financial help they can get! 

This is what payday lenders are counting on — that you are so desperate for cash that you’ll take a loan from anybody who will give it to you, even predators who will charge you an annual percentage rate of more than 1,000%. Payday loans also trap you in a cycle of debt. More than 90% of payday loan borrowers end up regretting their original payday loan.

Don’t give in to the payday lenders unless you’ve exhausted every other option. There are many other ways to improve your financial situation that don’t involve payday loans. Here are 40 of them. 

1. Open a checking account and get a debit card

Did you know that, according to the Federal Reserve, in 2020, one out of every six people in this country either doesn’t have a bank account at all or must rely on alternative methods (like payday loans) to manage their finances? This is known as being unbanked or underbanked.

In the cities with the worst payday lending problems, the number of unbanked or underbanked residents is one of the biggest problems.

If you do not currently have a bank account, the most important thing you can do to improve your financial health is to open one. Having a bank account gives you access to most mainstream financial services, like credit cards, savings accounts, loans, investment accounts, etc. 

If you’re worried about high bank fees, minimum deposits, or geographic access to a branch, don’t! These days there are plenty of online banking services like Chime.  Chime gets a special shout-out here because it is built to make banking as cheap and easy as possible. They don’t charge overdraft fees, monthly fees, or require you to keep a minimum balance in your account.

There are also several loan apps that are compatible with Chime if you need a quick lower-cost loan.

2. Sign up for a cash advance app

Those apps we just mentioned that work with Chime? Those are known as cash advance apps (or sometimes they’re called paycheck advance apps) and they help you cover the gaps between paydays.

Cash advance apps offer funds to help you cover the gaps between paydays. These apps require you to link your bank account so that the app can see how much you make, how often you get paid, etc. You will have to have a steady history of regular deposits to get qualified. They don’t charge interest, so they’re cheaper than payday loans, especially if you live in a state where state laws prohibit payday loans and you end up borrowing from a tribal lender.

Cash advance apps make money by asking for “tips” when you borrow, and sometimes they charge a small monthly subscription fee. It’s important to consider the amount you tip, though. Some companies will offer suggested tips that are equal to our higher than the fees a payday lender would charge. It’s important to remember that these tips are not mandatory. It’s certainly fair for the lenders to ask for them (otherwise they wouldn’t make very much money at all) but make sure you do the math to ensure you’re not overtipping. Use a good APR calculator to determine the tip amount that’s fair for your financial situation. Aim to pay the equivalent of a 36% APR or less. For example, to borrow $100 for four weeks, a 36% APR would be about $3.

In the beginning, you might only qualify for $20-$50, but if you build a steady repayment history, you’ll eventually qualify for more. Earnin, Dave and Brigit are good options, but here are some of our other top recommendations.

3. Open a savings account and set up an emergency fund

Savings accounts offer higher interest rates than checking accounts, which means your money will make money as long as it’s in there. This is why savings accounts make great homes for emergency funds.

The easiest way to set up an emergency fund is to establish a budget and have a percentage of every paycheck sent to your savings account. You can automate the process if you have direct deposit. If you don’t get direct deposit from your employer, you might be able to automate the process with your bank.

4. If your credit score is low, take out a credit builder loan

A credit builder loan is a fantastic way to start raising your credit score. Here’s how they work:

You decide how much you want to “borrow”, and the company sets up an account for you. 

You then make regular payments into that account. The company reports your payments to the major credit bureaus as loan payments. This helps you build a positive payment history.

When your account balance matches the amount you “borrowed,” the company issues that money back to you. Some, like Self, also allow you to use it as a secured payment for a line of credit.

5. Get a credit card (even if it’s secured)

Speaking of credit cards, there’s no time like the present to get one! Even a secured card can help you rebuild your credit history. Just make sure that you use it sparingly and pay it off every month. 

Of course, not all credit cards are created equal. Make sure you do your research. Go after the cards with the lowest fees and the best perks. Here’s a good article to help you navigate the process

6. Refinance your student loan debt

According to the Education Data Initiative, student loan debt totals more than $1.75 trillion. More than 43 million Americans have student loan debt, and that debt averages out to around $39,000 per person. Yikes!

Your student loans will stay on your credit history forever, so it’s important to pay them off. If you’re having trouble making payments, contact your loan provider. Many of them have programs to help borrowers with reduced incomes. You can also try refinancing through companies like Earnest or SoFi. 

7. Do you need to declare bankruptcy?

You should also know that declaring bankruptcy isn’t the magic eraser that many believe it is. For example, not all bankruptcy is the same. Chapter 7 allows you to discharge all your debt, but a trustee can sell your stuff to help cover the costs of what you owe. if you declare Chapter 13 bankruptcy, you get to keep your stuff, but you do have to make payments on your debt for 3-5 years. The costs are different, too.

Before you do anything, though, you should talk to a lawyer. If you can’t afford to hire an attorney, your state Bar Association can help connect you to an attorney who offers low or no cost initial bankruptcy consultations.

8. Get a better job

If your job isn’t paying you enough to live, talk to your boss about taking on some overtime or getting a raise. If they won’t meet your needs, there’s no time like now to shop around for something that will pay better, offer better benefits, etc. The coronavirus pandemic has led to what’s being called “The Great Resignation,” an economic trend that has led to massive numbers of U.S. workers resigning from their jobs to find work with better wages, benefits or working conditions.

In addition, check with HR to see if your employer participates in on-demand pay provider like DailyPay. These apps let you access your earned wages a few days early, but your employer has to be a member.

9. Go back to school

You don’t necessarily have to enroll in a college degree program (though doing so can help you put your student loan payments on hold for a while). Look for classes and skills-building workshops that will help you advance in your field. You could also take courses that will teach you the skills you need to strike out on your own. Trade schools offer vocational programs that are practical and affordable that can be completed in as little as eight weeks. Just make sure any school you choose is accredited before you hand over any tuition money.

If you’re worried about tuition, check out resources like Coursera and EdX

10. Get a side hustle

You’ve likely heard of people driving for Uber, DoorDash, Instacart, etc. You could also get gigs through apps like TaskRabbit, EasyShift, etc. A side hustle is great because it’s a way to earn extra money on a schedule that you make. Most of them are flexible when it comes to job requirements, too. 

Of course, if you’re creative, you can set up your own side hustle without having to contract through a gig employer. You could sell crafts on Etsy, set up a Patreon, the sky is the limit!

Check out this chart of 150 ways to earn money without a traditional job.

11. Negotiate

If you’ve worked for the same employer for a while, it’s time to ask for a raise. This is easier to do if you have an offer in hand from a competitor because nobody wants to have to retrain someone new — and be willing to accept that new offer if your current employer turns you down. Look around to see whether your company has lost several workers recently, or is struggling to fill openings. If so, that could give you some added negotiating power.

12. Find free money

Everybody knows how profitable a good old-fashioned yard sale can be. Take this idea a step further. There are so many ways to add some extra dough to your wallet. 

For example, Fetch, Receipt Pal, and the Amazon Shopper Panel offer gift cards in exchange for you sending in scans of your shopping receipts. Acorns rounds up your debit and credit card purchases to the nearest dollar, then invests that money for you. If you don’t know it’s there, your savings fund can add up.

The BeerMoney subreddit has lots of great suggestions for how to find or bring in extra money each month. 

13. Reassess your living situation

Do you need to downsize your living situation? Smaller houses and apartments cost less to power, heat, cool, and furnish. 

Maybe you need to take in a roommate or two. Or perhaps you need to sell your current home and move in with someone else for a while. The housing market is hot right now. Would it be possible to crash with friends or family until you get your finances back on track? 

14. Don’t pay for anything you can get for free

You probably already know that your local library is a great place to get books, music, and even movies for free — sure you have to return them, but they don’t cost anything to borrow. Did you know that you can also get free shipping supplies from the USPS instead of forking over cash for them at the grocery or UPS store? 

Sites like PINCHme offer free samples, and if you’re active on social media you can score free stuff from Influenster if you’re willing to post photos and reviews on your Instagram account.

If you’re a new parent or parent-to-be, there are several sites that offer free baby stuff, or manufacturer coupons for discounted formula, diapers, etc.

Your local area probably also has programs to help you get stuff like phone service, electricity, internet, and even bottled water for free. 

And, of course, there is always the Buy Nothing movement. You can probably find a group for your neighborhood on Facebook. This is a great way to share your excess and get what you need for free! 

15. Use coupons and coupon sites

If a store you shop at regularly has a loyalty program, sign up for it. These programs often offer cash back and will tailor discounts to your actual shopping habits. You can also go to the store’s websites and download coupons to your account. That way, you don’t have to remember to bring them with you when you go to the store. 

There are also coupon apps and websites that will have coupons and discount offers that you can clip and either print out or save to your phone. 

There are even apps, like Ibotta and Dosh that will give you cash back when you redeem their offers. Just don’t buy anything you wouldn’t ordinarily purchase. The last thing you need is to buy something you won’t use for $5 just because you had a coupon for $1 off!

16. Use cashback sites

Rakuten, Honey, MyPoints, etc. are all great browser extensions to have running in your browser if you do a lot of your shopping online. They will scan the web for coupon codes or offer you cash back.

Another option is to sign up for a program like Acorns or Stash. These programs link to your bank accounts and then, every time you make a purchase, they round that purchase up to the nearest dollar and invest the difference for you into a portfolio you choose. 

17. Watch out for lifestyle creep

When you start bringing in more money, it’s easy to start believing that you can afford to buy more (or better) stuff than you could before. Watch out for this! It’s called lifestyle creep. Remember, you’re trying to fix your finances! Put the extra money toward your debt and your savings until you are on solid footing, financially. 

18. Track your expenses

Track every penny you spend for at least a month. It’s not enough to know that you spent $20 at Target last week. You need to know exactly what that $20 bought. You might be surprised at how many ways there are for you to cut back once you see where your money is going. 

19. Review your insurance

Obviously, you want to make sure that you have health, car, and renter’s (or homeowner’s) insurance. Don’t take the first offer that comes along, though! Take some time to shop around for the best offers. Look for plans that fit your needs. 

For example, if you don’t drive very often, you could get insurance through a company like MetroMile, which charges you a flat base rate and then a per-mile fee. 

20. Invest in a retirement account

It’s easy to get caught up in the “right now” of fixing financial health. If you want to be truly financially healthy, though, you also have to address the long term. If your employer offers a 401(k), opt-in to it, especially if they offer to match your contributions. Even if you just put in the amount your company will match, the company match will double that investment and cut your income taxes.

If you are self-employed, after you have set up a sizeable emergency fund, save up some to open an IRA. 

21. Stop smoking

You probably know how bad it is for your financial health. Smoking even just one pack a week can be very expensive! In addition to the cost of cigarettes themselves, being a smoker raises the costs for your health insurance and medical coverage. 

22. Look for free entertainment

There is free entertainment all over the place. You just have to look for it. Your library probably has a community bulletin board that announces local festivals, movie nights, plays, concerts, etc. You can also find this information at your church or even online! 

23. Volunteer at festivals or become an usher

Do you want to see your favorite band but don’t have the funds for a ticket? Are you dying to go to Comic-Con or Lollapalooza but can’t afford the badges? Volunteer to help with the event! You’ll get a free pass or ticket in exchange for helping before, after, or for a little while during the event. Some theaters even have paid usher positions available, so you could see your show and earn some money at the same time.

24. Budget ahead for gifts

Some gifts are easy to predict, like birthdays and holidays. Others, like weddings and baby showers, can be more of a surprise expense. In 2021, 58% of Americans planned to take out a short-term loan to cover their holiday spending. Don’t let this happen to you. Set up a sub-savings account or a pocket in your bank account for gift buying. This way you won’t have to figure out where to find the money in your budget when a wedding invite arrives, or during the holiday season.

25. Make homemade gifts

Instead of using the money you’ve saved for gifts on actual gifts, use it on supplies to make the gifts yourself! The money will go a lot further and you’ll be able to give a lot more when you go this route. If you have leftovers, sell them locally or on Etsy. You could end up coming out ahead.

26. Set a family spending limit on gifts

Set a family limit on how much each gift can cost. That way nobody will feel left out if they can’t afford the same extravagant giving that someone else can. You’ll save yourself and everybody else money, too! 

27. Don’t buy cheap stuff just because it’s cheap 

When you need something right now, it’s hard not to choose the cheapest option available. Unfortunately, the cheapest option usually breaks down the fastest. That means you must replace it more often, which can get expensive! When you do the math, it is often cheaper in the long run to spend more on something that will last than to just buy whatever is cheapest in the moment. The most popular example of this compares spending $50 on a pair of boots that will last 10 years vs. a $10 pair that will last one year. If you can’t afford the $50 for the pair that will last, consider a “Buy Now, Pay Later” (BNPL) program like Klarna or Afterpay that will allow you to buy the more expensive item now, but will space out the payments to $12.50 every other week for two months. Just be careful to not have more than one item at a time on a BNPL plan, because you don’t want to get buried in payments. And make sure the BNPL plan you choose doesn’t charge interest.

28. Designate one day a week as a “no-spend day”

Have at least one day each week where you aren’t allowed to spend any money at all. You might be surprised at how much buying stuff has become a habit when you make yourself stop for a day. 

Some people take this challenge even further and do “buy nothing” months or even whole years! February is a popular month to try “buy nothing” since it’s shorter and most people have an excess of items from the holidays. Of course, even in a “buy nothing” month you’re allowed to buy perishables like milk, bread and fresh fruits and veggies. The idea is to cut out all non-essential spending.

29. Don’t skimp on preventive health care

Everybody hates going to the dentist. However, that twice-yearly checkup can spell the difference between having a tiny cavity that can be fixed with a sealant (which is usually covered by basic dental insurance) and having to get a root canal and a crown (which can run a couple thousand bucks). 

The same is true for other areas of your health. Your annual physical and checkup might feel like a chore, but it’s better and cheaper for you in the long run because it helps you catch and fix problems before they get out of hand. 

30. Sign up for a medical research trial

If you need more specific medical care but are worried you can’t afford it, look for a research trial. Some hospitals or research companies will pay you just to have basic screenings that are fully covered by your health insurance or the Affordable Care Act (such as mammograms and colonoscopies.) The pay for those isn’t high (usually $100 to $200) but you’re getting paid for important screenings that you need to have done anyway. There are other more lucrative research trials, but whether it’s worth the money depends on the amount of experimentation you’re willing to endure. And make sure any trial you choose is run by a reputable hospital or drug manufacturer. Do a little bit of research before you commit.

31. Donate plasma

It doesn’t sound pleasant, but you can earn some quick cash by donating plasma. You can usually get $50 per donation, and sometimes facilities will offer a bonus for first-timers. It’s not pleasant, but it’s usually safe for healthy people who take the proper precautions. And if it’s any consolation, the fluids are used for a good cause. The healthcare industry relies on people who provide their blood and plasma to make life-saving medicines. Just be sure to pick a reputable facility.

32. Shop around for the lowest prescription drug prices, and search for coupons

Did you know that different pharmacies will charge you different prices for the same drug? Even for the generic version? It’s true! Make sure you check around for the most affordable pharmacies in your area before you try to fill a prescription. Use a price comparison site to make the process easier.

And, of course, you’ll want to take advantage of programs like GoodRx. It saves people tons of money. 

Most importantly, if you can’t afford your prescription medication, talk to your doctor. Sometimes the doctor will have access to samples of the medication you need, discount coupons or information about programs that can help to reduce your out-of-pocket cost. If the doctor’s office can’t help you, turn to Google. Sometimes a drug manufacturer posts coupons online, but they aren’t well-publicized and 10 minutes of searching can occasionally save you hundreds of dollars.

33. Buy store brand and/or generic

Often, the store brand is just as good as the name brand. Sometimes it’s even better! If you’re ever in doubt, check out the ingredients. You’ll find that they’re virtually the same ingredients and in the same amounts! 

One note: when buying stuff like toilet paper, paper towels, etc. it’s good to check out the price per unit, too. If you’re paying less to get less, it’s not really a savings!

34. Refinance your mortgage

While mortgage rates are slowly ticking back up, they are still low enough to make refinancing attractive. Refinancing can reduce your interest rate, which can save you thousands of dollars by the time your home is paid off. Home values are skyrocketing as well, so you might be surprised by what your home is now worth and how much extra money you can borrow.

35. Reuse

This is another great place to mention the “Buy Nothing” groups talked about above. What you don’t need today could be someone’s prized possession tomorrow. And vice versa! 

One trend that is very popular in this area is the “clothing swap.” A bunch of friends who are relatively the same sizes get together and trade clothes back and forth. It’s a fantastic way to update your wardrobe without spending a penny! 

36. Get advice from others in your situation

You aren’t the first person to have been in a precarious financial situation. Remember, millions of people live near or below the poverty line in this country. If you’re struggling, talk to someone who has been there. 

If you’re too embarrassed to reach out to someone you know in person, the internet is full of support groups for people in your exact situation. The Povertyfinance subreddit is a good place to start. It has tips and even success stories for when you need inspiration. 

For example, one Redditor built up money by saving all of his $1 and $5 bills for five years. He got the double benefit of ending the 5 years with a healthy amount of savings but also had the security of knowing he could turn to that money in case of an emergency.

37. Borrow money from family or friends

No one likes asking for help, and there’s a reason it’s called personal finance. We like to keep the details about our financial situations private. But if they have the resources, borrowing money from someone you have a preexisting relationship with can be a fast and inexpensive way to solve your problems without expensive loans, and it won’t matter if your credit is bad. Just be sure to make an agreement in writing and pay them back as planned. You don’t want to start a family feud or lose a good friend.

38. Borrow money from a stranger on Reddit

Another borrowing option comes through the social media platform Reddit. Using the subreddit r/borrow, people who need to borrow money post a request. The request specifies how much money they need to borrow, how the money will be spent and how much the borrowers will repay.

Requests usually involve money for emergencies, to tide them over to payday or deal with unexpected expenses, such as critical home improvements, a utility bill or vet bills, though sometimes the requests are as simple as asking for $15 for a pizza to tide them over to the end of the week.

Individual investors choose whether or not to fund a request, then the loan is usually sent and repaid through cash apps like PayPal or Venmo. Repayment terms are flexible. And because you’re borrowing from an individual, there are no prepayment penalties. The drawback is that you need to have a specific amount of Reddit history before you’re allowed to post a request to borrow.

It is recommended that loans be kept below $1,000, and the subreddit moderators warn that loan requests for more than $200 can be difficult to fund. Nevertheless, there are many cases of funded loans for much higher amounts.

39. That said, don’t deprive yourself

It’s tempting to make do with as little as possible when you’re in financial trouble. However, if you deprive yourself of everything fun, you’re going to burn out. Burnout, most often, turns into binge behavior. That could leave you worse off than you started! 

It’s important to give yourself time and space to have some fun and blow off some steam. The goal is to find ways to have fun that won’t leave you short on rent money at the end of the month. 

40. Tackle your debt

If you’ve been ignoring your debt, it’s time to stop doing that. Make a plan and start paying that debt off using either the snowball or the avalanche method. It’s good to prioritize any payday loan debt you have here, simply because the interest rates are so high. 

If you’re not sure where to start, there are a lot of great resources out there to help you figure out your plan. You might want to take out a debt consolidation loan to get everything under control, consult a nonprofit credit counseling agency or try a debt settlement plan.

Credit counselors usually offer a free consultation and will help you set up a debt management plan. With a DMP, the credit counselor will act as a middleman, negotiating with your lenders and simplifying your payment process. This service isn’t free, though. It will typically cost anywhere from $25 to $55 per month.

Check out the National Foundation for Credit Counseling (NFCC) for tips or help to connect with a trustworthy local credit counselor.

Debt settlement programs, on the other hand, are usually offered by for-profit companies, In a debt settlement plan, the company negotiates with your creditors to allow you to resolve your debt by paying a “settlement” (a lump sum that’s less than the full amount you owe.)

The bottom line

When you live in poverty, life is stressful, and it’s expensive to be poor. Poverty and debt almost always mean spending more on basic necessities like shelter, transportation and clothing — with a smaller paycheck. It’s easy to feel trapped. Use the tips shared here to help you start making progress toward a better financial future. And always remember, you got this!  

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