Harris: March Madness: avoiding a mad dash for cash

By Charlestien Harris, Retired Financial Coach at Southern Bancorp

Well, it’s that time of year again! If you are a basketball or sports fan, you know exactly what I’m talking about – it’s March Madness season! This is the time of year that college teams prepare for all season long. The key to success is preparation and execution of a plan laid out before the season starts, and I’m sure each team makes adjustments along the way.

Oddly enough, the same approach works when creating a financial plan. Certain financial decisions can throw you off your game if you’re not careful. So let’s take a look at some options that can spoil your game plan and keep you from winning in the end.

1. Payday Loans

A payday loan is a small, short-term, unsecured, high-cost loan – typically for $500 or less – due on your next payday, usually within 2–4 weeks. Often called cash advances, they provide immediate cash but charge fees of $10 to $30 per $100 borrowed, resulting in annual percentage rates (APR) that can exceed 400 percent. Payday loans can trap you in a cycle of debt if you cannot pay the full amount when it comes due.

One way to avoid this type of debt is to create a budget and plan your spending as much as possible. Anticipating unexpected events before they happen can make a big difference in whether you maintain financial balance and keep your strategy on track.

2. Advance Cash Loan

An advance cash loan (or cash advance) is a short-term, high-cost loan that allows you to withdraw cash against your credit card limit or receive an advance on your paycheck. While it provides quick access to funds – often through ATMs, banks, or apps – it typically comes with steep interest rates and fees, often 3 to 5 percent of the amount borrowed.

I have one credit card that is always sending me cash-advance checks for my “convenience.” I never use them, and you don’t have to either. Think of using these checks as sinking deeper into debt, not as a way out of it.

3. Pawn Shop Loan

A pawn loan is a fast, short-term, secured loan where you pledge personal property – such as jewelry, electronics, or tools – as collateral. You typically receive 25 to 60 percent of an item’s value in cash. No credit check is required, but if you fail to repay the loan plus interest and fees within the term (often 30–90 days), the pawnbroker keeps and sells your item.

This can be a devastating option because many people cannot repay the loan, and the pawned item – often something of sentimental value – the is lost forever. Be very sure you are willing to part with an item before pawning it, because losing it might be the end result.

4. Salary Advance Loan

A salary advance loan is a short-term, often low- or zero-interest loan provided by an employer that allows an employee to receive a portion of future wages before payday. It is intended for urgent, unexpected expenses – like medical emergencies or car repairs – and is repaid through automatic deductions from later paychecks.

This option is risky because you are borrowing money from future income you have not yet earned. If you already live paycheck to paycheck, a salary advance can keep you in the red and make it even harder to maintain a balanced budget. Instead, try reducing spending within existing budget categories. With a closer look, you can often find a little wiggle room.

You can avoid the “dash for cash” by improving your financial knowledge and making strategic money moves – regularly monitoring your budget and staying aware of your spending habits – rather than resorting to last-minute, desperate measures. March Money Madness does not have to wreck the financial plan you’ve created. Stay aware of the money traps that can keep you broke, and develop a defensive strategy when it comes to handling your money.

For more information on this or other financial topics, you can email me at charlestienharris77@gmail.com, or write to me at P.O. Box 1825, Clarksdale, MS 38614. 

Until next week – stay financially fit!

Charletien Harris is our financial contributor, a retired financial coach for Southern Bancorp.