Do Cash Advance Apps Actually Hurt When Money Is Tight?

Have you ever caught yourself staring at your balance? You're three days from payday, and the math just does not work. And then a cash advance app shows up like a rescue rope.But you're wondering to yourself, is this help or is it just a trap? So today on the show, I want to talk about what you can do next to get through this tight moment without digging a deeper hole for yourself.Hey, friend. Ralph Estep Jr. Here. This is Financially Confident Christian, where we're breaking the cycle of financial shame and doing it with confidence.And today's topic hits home for so many of us. Those cash advance apps and whether to help us or hurt us. But bigger than that, what to do instead when money is tight.Well, let's get right to today's listener question. Ralph, I'm barely making it to payday each month, and now I'm thinking about using one of those cash advance apps.I know it sounds desperate, but I don't know what else to do at this point. My concern is this. Is this going to help me or just dig a deeper hole? What should I do? I feel for you on this one.I want to tell you in a moment about how I fell victim to these as well. But you've got a great question, and I am so glad you asked.I'm so glad you've been vulnerable here because I feel like this is something that a lot of people face on a daily basis. Sounds like for you, it's every month. And in a lot of ways, a cash advance can feel like relief.It's an immediate, you know, it solves an immediate problem. I can't disagree with that. It does solve an immediate problem, but it's that repayment squeeze which usually hurts us.Which means I want to share a story with you because I can lean into this one because this is something I've been in myself. I remember when I just graduated from college and back then, back in the Stone Age, as they say, what they used to do then is they didn't have apps.We didn't have an iPhone or anything like that back in the 90s, but they used to do this thing where they would send out these checks. They would just send a check in the mail. I'm not sure where they got the information at this point.I think it was sort of like they knew there was blood in the water, for lack of a better way of saying it, but they would send out these checks. And I'll never forget the first time I got when I just bought a townhouse. I was about 23 years old and things were tight.I mean, I was having a hard time making ends meet. I was getting paid bi weekly, and it seemed like every paycheck was already spent before I even got it. Never forget, I went out and got the mail.And in the mail was a check. And I'm thinking, wow, this is cool. I got a check today. And I open up the thing and it's a check for $1,500.I'm thinking to myself, well, who would have sent me $1,500? And I'm looking at it, and of course attached to, they've got a nice letter. And you know, we, we know sometimes you're struggling with your finances.So here's a check for fifteen hundred dollars. And all you've got to do is just sign the back of this check and put it right in your bank account.And of course, you know, I can't say they didn't disclose the pertinent things. Oh, here's the interest rate. But honestly, I didn't think about any of those things because I saw $1500 and I said, that solves an immediate need.I'm always feeling like I'm behind. Well, here's the problem with that. That first check led to the second check.Cause I'll never forget, about 30 days later, here I am in that same spot again. Somehow my budget took in that fifteen hundred dollars, but it was still short again, so it seemed like clockwork, not 30 or 45 days.Here comes another check. Now, this one was from another company, and this check was for $3,000. I'm thinking, wow, another bailout. So now, of course, what did I do?I signed the back of that check, put it in my bank account, said, well, you know what, this is going to work because this will finally be that little bit I need to get me over the top. Well, needless to say, this grew to about $7,500 at one point. And that's when I finally said, something's got to give here.So if you're feeling this right now, the thing is, right now, it's so easy with these bank apps. You can go right on your phone and you can get these loans simply. I had a little friction because at least I had to wait for them to send me a check.But if you're feeling this right now, let me talk to you about how to really work through this. The first thing you've got to do is you've got to name the real problem. And this is the thing that I ignored.The real problem Is either it's a short term gap or it's an ongoing shortage. Let me lean into that a little bit. A short term gap is a one time emergency.Things like I wasn't expecting to pay for medication, I missed a day at work because I was ill. Something came up, a car repair, something along those lines. Just those one off things, those emergency things. That's the short term gap. But that wasn't what I was dealing with.For me, it was an ongoing shortage. It was every paycheck I was always behind, every month I was going behind.And here's the problem and I'm going to lay it down as clearly as I can lay it down. If this is an ongoing problem, an advance often just becomes a cycle. You mentioned in your question, am I digging the hole deeper?Yes, unfortunately, at that point, if this is a one off, a true emergency, maybe there's a place for these. But man, if this is an ongoing problem, month after month, paycheck after paycheck, that's a cycle. What really costing you against that?But let's say you decide, hey, this is a one off. This is something I think I need to do. Ralph, the next thing I want you to do is read the true cost.I'm talking about the true cost of this before you even touch it. See, when I got that check, that check piqued my curiosity. I saw the amount and I didn't really think about the true cost of this.But with these apps, it's even a little bit more sinister. There's fees, there's tips. A lot of times you have to subscribe to this app. A lot of times there's an instant transfer charge.A lot of these work like this. Like they might say, hey, we're going to give you an advance for a thousand dollars.But guess what, you're only getting $800 because we're going to take our 200 doll right from the beginning. And then you've really got to lean into what are the repayment timing things.Is the repayment of this going to hit before your rent is due or before your groceries are due? A lot of these are short term. They're like a what they call a payday advance.You might be getting that next paycheck and this money is going to be drafted from your account. You might find yourself right in that same place. You might trigger an overdraft on that advance. That's a huge red flag. So think about this.Read the true cost, understand exactly what you're getting at. And if you use one of These, listen to me on this. Treat it like a temporary bridge with some real strong guardrails. Borrow the smallest amount.That solves one urgent need. This isn't a time for a bailout. This isn't a time for a consolidation. There are other things that we may talk about in another episode.This is not the time to consolidate. Pick just one advance only. No stacking of these. That's what I was doing. I was stacking. Stack after one and the second one and the third one.And after a while, like I said, for me it had grown to a number that became a term loan. It's another pro tip. Turn off those extras, those instant transfers, the subscriptions if you can. And here's another thing you should do.Put it right on your calendar. Delete that app after you repay that. You don't want to make this a recurring thing. This isn't going to be your go to thing.There are some other options though. So I'm going to encourage you right now to do the better than in advance moves. These are some same day options you can do.Let's say right now, you're in this position right now and you're. What am I going to do? Number one thing you can do, call the bill company.If you've got a bill, you weren't expecting something that you just can't pay right now, pick up the phone and call them. What I have learned is most of the time they want to work with you. There is no value in them becoming a collections for you.That's not what they want to do. Ask them to move the due date. Ask them if they have a hardship plan or they can put you on an extension.What you're going to find is most creditors have a workaround for this and at the very minimum, pay only the minimum on one bills.Like say for example, you're really working on paying off your credit cards and you've been really, you've got a debt repayment plan and you're like Ralph, I am knocking this out. But if something comes up, you may have to take a step back and say, you know what? For this time I'm just going to pay the minimum.That's okay to do that sometimes because then you're covering everything. And if by chance you find yourself in a problem where you got a fee, call them up on the phone, ask for a late fee reversal.Ask them to waive those reconnection fees or those overdraft forgiveness. Because what I have found is most banks, most creditors, most utility companies, if you call Them, you tell them what's going on, to work with you.They don't want to see you out on the street. And I'll just say one more thing, because we've talked about groceries last week.If food is a pressure point for you, I understand what that feels like. I've never been in that situation. But if it is, reach out to some local food pantries and ask them if they can help you. Just one time to breathe.Because sometimes that one little bridge can make it work better. And finally, I'm going to encourage you to do this. Build a simple payday shield so this stops repeating. This is the thing that I didn't do.We talked about this on the show yesterday. Create that bills first. Transfer every payday. Bills get set aside. Build that payday cushion with something as little as $10 per pay.Build it up to $100, because that one small buffer can break that panic loop. And that's what we're really leaning into today. It's that panic leap. So let me just encourage you right now.You're not desperate when you're in this situation. It's not about desperation. You're under pressure. And here's the best part of it. God sees you in that pressure.So here's your quick win, your single step for today. I want you to just list two bills due before payday this week. And right next to each one, write an action. Maybe things are tight. Write an action.I'm going to call them for an extension. It's okay to do that. Or write down, I'm going to pay the minimum.Because what I have found is one tiny plan takes away that fear in your chest and you can start to breathe again. Well, let's look at the Bible today. Let's lean into Isaiah, chapter 41, verse 10. It says this. So do not fear, for I am with you.Do not be dismayed, for I am your God. I will strengthen you and help you. I will uphold you with my righteous right hand. What a reassuring verse today.And when money feels tight and money feels scary, God offers something bigger than money. He offers us his presence and his strength doesn't make us panic. And he certainly doesn't give us any shame. How about we pray together?Father God, you see the tight place that so many of us are in right now, and you see that fear that rises when the balance is low and those bills are so close to being due. And we just ask right now that you would steady our hearts, Lord, give us wisdom for that next decision and.And really give us courage for that next phone call that we might need to make. Lord, provide what is needed. Open the right doors, Lord, and protect us from the traps that deepen the struggle.And Lord, please replace shame with your gentleness because we know you're near, we know you help and we know you always uphold us, Lord, and we ask this in Jesus name, Amen. I just want to encourage you. You can take the next step with peace and you're not alone in this.And if you've got a question for this show, I'd love to answer your question. That's why I do this show every day. It's my passion to answer your questions that help you break that cycle of financial shame.If you've got such a question, go right to financiallyconfidentchristian.com/question it'll be in the show notes. I'm going to give it to you one more time if you want to write this down. It's financiallyconfidentchristian.Com/question.So thank you so much for joining me today. A tough topic we talked about today, but stay financially savvy. May God bless you. Have a great day and I'll see you again on tomorrow's show.