Whilst payday loans may seem attractive due to their ‘instant’ nature, the interest and fees which often rise above 100% of the actual loan amount mean you’ll be taking two steps backwards. When your pay day does roll around, you now be short around double what you took the loan out for meaning that for this week or month, things may even tighter for you.

There are however alternatives that are really worth looking at, especially if you have considered or used these types of loans in the past.

Having to applying for a payday or paycheck loan should be your very resort. If you only need a small amount and can easily live without the repayment amount from your next pay then it may get you out of a sticky situation. It may even simply buy more time with the landlord for instance until you can apply for a personal loan - just remember that relying on this type of loan is likely to get you deeper into debt, and must be treated with extreme care.

It is quite often advertised that the way to be debt free is to consolidate your debts. This can be true for some people, but not all. Here are some key points to keep in mind before deciding to consolidate your debts:

Of course if you are so short on cash that you are going further and further into dent, then a consolidation loan would be a great help. However if you can manage your current repayments you will get out of debt faster if you pay off your most expensive debt first (the one with the highest interest rate) and then once this is paid off, use the repayment amount from this debt on your next highest debt.

Continue this cycle through your 3 most expensive debts, and you’ll have the rest of them paid off in no time at all.

Remeber - avoid the temptation to spend your saved repayments on anything other than paying off other debts. This is the key to getting out of debt.

Looking at your interest rates on your debts, you’ll probably see the some of them are around 10% pa (per annum or per year), and others such as store cards go as high as 28% pa. This means that if you have $1000 outstanding on a store card at 28% pa for one year, you’ll pay $280 - nearly 1/3 of the total debt!

Now, this example isn’t totally accurate as you will have made some repayments throughout the year, but hopefully it gives you an idea that the higher the interest rate, the more expensive the debt is - even if you only owe $50.

Store cards in particular can be very nasty. They often quote very low minimum repayments which make them see affordable, but in reality your minimum repayment is mostly going towards paying the interest, and not much off the total balance. In other words, you end up giving more of your money away using these cards than with most other credit cards/loans.

Ok, so now we need to prioritise your debts based on their annual interest rate, not their outstanding balance. The reason for this is that we want to reduce the amount of money being paid on interest as quickly as possible.

Once your list is in order with the highest interest rate at the top, this top item now becomes your number one priority. Any spare money you have (bonuses, tax refunds, gifts of money) need to go against this debt. Whilst doing this, keep your other debts at their minimum repayment levels only to maximize the amount of money you can put against your most expensive debt.