The Ugly Face of Debt

It’s easy to fall into debt, but it’s hard to dig yourself out of it. That’s why sages through the ages have warned people to steer clear of debt. For instance, 19^th-century writer Josh Billings advised, “Never run into debt—not if you can find anything else to run into.”

The problem is that if you’re like many American workers, especially the up to 78% who live paycheck to paycheck, you don’t have many places to run when even a small catastrophe or unplanned expense pops up—a car repair, say, or a broken water heater.

If you try to avoid the debt route, you could wait until payday and juggle bills, but that can trigger late fees and overdrafts. So you may think it makes sense to put that expense on a credit card. After all, at least you’re not taking out one of those payday loans with sky-high interest, right?

Compound Interest is a Wealth-Whacker

It’s true that payday loans are the worst, averaging $520 in yearly fees for their customers. But in the long run, credit cards aren’t that great, either. When compound interest works against you, it can be a real wealth-whacker. For instance, say you pay 12.83% interest on $15,956 in credit card debt—the average for American households. After carrying this balance for 40 years, you will have paid your friendly credit card company a grand total of—drum roll, please—$2,629,618.64. Gulp!

Even if you didn’t have to pay those massive amounts of interest, though, being in debt hangs over your head like an invisible raincloud. It’s much healthier psychologically, relationally, and most every which way to get out of debt and stay there.

The biggest problem with most loans and credit cards is they WANT to extend you debt. A loan companies dream is to have you continuously make small payments, never quite getting to the bottom of your debt, for the rest of your life. The biggest lesson here: don’t always just focus on the interest rate, focus on the entire product. Ask yourself, “Do I actually need this much money?”, “Can I afford to pay this off in the defined term or quicker?”.

Alas, we still get it. Since you don’t have an emergency fund, though, how can you take care of those small but poorly timed budget-busters? One way is through tapping into wages you’ve already earned but haven’t yet been paid for.

So how is that possible? That’s where ZayZoon comes in.

ZayZoon: A Solution for the 21^st Century

ZayZoon, which commenced business in 2014, is an award-winning FinTech (Financial Technology) company that partners with employers and payroll service companies. One of the key components of ZayZoon’s financial wellness platform is Wages On-Demand, which enables employers to effortlessly advance wages to workers who need access to them before payday. These paycheck advances are particularly helpful for workers with irregular hours or those who get paid monthly.

As a ZayZoon user, you determine the amount you want to take out through the app. If you have enough accrued wages available, the money will be transferred to your bank account in less than a minute. On your next payday, your paycheck will be automatically debited for the amount due. You’ll pay a small convenience fee, but ZayZoon is a safe, no-interest option that will help you avoid flinging debt onto a card where it might linger.

Employer advances let employees collect cash they’ve already earned and avoid predatory loans and overdraft fees. Since employers don’t have to devote extra time and effort to this employee perk, they love it. With employees enjoying better financial well-being, both employers and employees benefit from ZayZoon.

To learn more about ZayZoon wants to help, check out the blog here.

Sources:

https://calgaryherald.com/business/local-business/startup-of-the-week-a-conversation-with-zayzoon-founder-tate-hackert

https://www.finextra.com/newsarticle/29059/zayzoon-bids-to-upend-payday-lending-market

https://www.cnbc.com/2017/08/24/most-americans-live-paycheck-to-paycheck.html

https://www.businessinsider.com/compound-interest-and-credit-card-debt-2013-2