Question

Ryan is broke again. Payday is five days away, and his check for the payment on his new car will reach the bank tomorrow. That car is his pride and joy. It’s a big part of his image. Once a month he slips away from work early, drives to a nearby military base, makes sure he doesn’t see anyone he knows, and goes to a payday loan place to get some cash. Every month he gets a bit further behind. He’s desperate enough to take some good advice, and he has turned to you. What will you tell him?

Answer 1

Ryan needs to make a realistic household budget, consider selling or trading his expensive car, build an emergency fund, seek credit counseling, and potentially consolidate his high-interest loans with a lower interest loan from a bank.

Step-by-step explanation:

Ryan seems to be in a problematic cycle of relying on payday loans to maintain his financial status, which is a dangerous situation that can lead to a debt spiral. As for advice, Ryan should start by creating a practical and sustainable household budget that fits within his actual income. Additionally, considering the sale of his car or trading it in for a more affordable model could free up some finances. He must also look at building an emergency fund to avoid high-cost loans for unexpected expenses in the future. If possible, it's advantageous to seek credit counseling services to help him manage his loans and finances better. Securing a personal loan from a bank at a lower interest rate to consolidate the high-interest payday loans can be a temporary solution, but in the long run, it's imperative to live within one's means and save regularly to prevent these situations.

Answer 2

I would advice Ryan to escape the vicious cycle of interest and debt that he is stuck in. The reason for this is clearly his car and he needs to make a tough decision which is to sell it to somebody and recover the amount he has paid for it. He can use this money to pay off his loans after which he should save the money for a car and buy it in one go instead of financing it. He should also learn to learn to live in the means available to him and should not be tempted to buy things he can't afford.