(In response to a lively debate this week about payday loans, I am re-posting an article I originally wrote in June 2007. If you’ve been following this thread or you’re a regular reader of this blog, do be aware that I am out of the office for a few days because of back-to-school errands. I don’t have access to my work e-mail and blogging will be sporadic.)

Payday loans, pawn shops, tax refund anticipation loan, credit card cash advances, overdraft protection credit lines, post-dated checks, check-cashing services …

There are almost as many ways to get quick cash as there are places to spend it on. But most of them involve people who want to make money off the fact you need money now.

Most of the spam that ends up in the quarantine section of my blog involves payday loans. I’ve never used one of those services, but there’s been plenty of media attention lately about that industry. Hopefully, you’ve been paying attention to the interest rates and fees that are involved. (If you have no other option for paying an emergency expense, you’re really dealing with long-term financial issues, not a short-term problem.)

I did use tax refund anticipation services for two or three years when I was a single parent and I WANTED THAT MONEY NOW! But I realized that waiting three weeks for my entire tax refund was better than getting money in five days by paying a bunch of fees. (Besides, what if you or your tax preparer made an error in calculations? Would you like to pay back money you should not have received in the first place because there was a mistake on the forms?)

And playing games with the checkbook is a dangerous situation when bounced check fees at the bank are now reported to average $34 for each check. If you’re living paycheck-to-paycheck, I bet you can think of plenty of other things to spend $34 on. And whomever received that bad check might take action beyond what your bank is doing. (I remember talking to someone a few years ago who was barred from writing checks at one grocery store because of repeated bad checks, and didn’t understand why that situation led to check-writing problems at other stores. Duh.)

What can you do instead? Get creative with what you’re spending your money on, how much, and when to time those purchases. You need to improve your cash flow as much as possible. So if there’s extra money in your checkbook on the day after payday, use those funds to pay off a loan, shove the money in a savings account or take advantage of sale prices on groceries and household supplies that you can fall back on while you wait out a tight pay cycle.

Your goal is to reduce or eliminate the situations where I NEED MONEY NOW AND IT’S NOT PAYDAY YET.

And for some more really great tips, go to the Pay Day Loan Consumer Information page on the Consumer Federation of America’s web site.