Do you ever run out of all your money before payday? If so, you are in the target market of payday loan companies. Unfortunately, those who need payday loans are also the least likely to be able to afford the finance charges of 300 percent APR (annual percentage rate) or more that come with such loans.

In their defense, payday loans do provide a service to the desperate. Problem is, they often lead to only more desperation. If someone needs, say, grocery or gas money to get through the week until payday, they might consider a payday loan. Usually that means the borrower writes a check to the company for the borrowed amount plus a fee. So if a borrower wants to walk away with $100 cash, they'd typically write a check for $120. That check would be post-dated to the borrower's payday on which it would be cashed by the company. In essence, a $20 fee is paid to borrow $100 for a couple weeks or less.

Other than the fact that $20 is expensive (at a 14-day term, that computes to a 521% APR!), what's wrong with a payday loan? After all, it's better to pay the $20 fee than a $35 late charge to a credit card company or multiple fees for bounced checks, right? The problem is it doesn't always end there. The borrower, now $20 poorer, will have to make do having already spent $100 of his or her next paycheck. And more importantly, they are setting themselves up to need another payday loan. A cycle of dependency begins and the borrower gets further and further behind. Imagine spending $20 again and again to borrow the same $100.

The good news is that avoiding ever needing a payday loan is fairly easy. Really, all it takes is $10 a week. Start today. Just save $10 each week in a coffee can. In ten weeks, deposit the $100 in a savings account and continue saving $10 weekly. In six months, you'll have about $250, which will take care of most cash shortfalls. In a year, you'll have $520, which should completely eliminate the need for a payday loan.

Another approach is to ask your bank about overdraft protection, which means if you spend more than your checking account contains, they won't bounce your check. Sometimes they just charge the interest on the overdrawn amount, which usually amounts to no more than a few dollars. However, you don't want to pay a monthly fee for this. Also, if the bank charges a fee when you overdraw, you don't want to use it more than once a year.

Other fixes include: Talking to your creditors, (maybe your landlord will let you slide a week) working some overtime, and borrowing from friends. Borrowing among friends is generally a dubious policy. But if you hear a friend or relative considering a payday loan, it might be time to offer your help. One idea is to offer them the same loan with no fee, but one condition — that they continue to make payments to a savings account after you are paid off and until they get the $200 or $300 necessary avoid needing a payday loan in the future.

Once you have avoided taking a payday loan, take a few moments to identify the root of your cash flow problem. Is it budgeting? Are you spending beyond your means? Are your earnings too meager? Do you need credit counseling? Solving this challenge at its root is the best way to ensure you avoid another payday loan situation.