There are plenty of ways to celebrate with friends and family without putting yourself into more debt.
It’s that time of year again when panic kicks in because the Holidays are right around the corner, and you find yourself unprepared.
I recently received an email from my local credit union offering “Holiday Loans.” These advertisements have always irritated me. The email states “If you need extra money for the Holidays to help you celebrate, a holiday loan could help with expenses.”
Are you serious?? Maybe you want to visit family and don’t have the funds to do so. You might think a loan like this could take away the stress of holiday expenses, but a loan could backfire.
For curiosity’s sake, I continued to read the email. I could get a personal loan for up to 60 months at a 5.98% interest rate. If I decide to take out a $3,000 loan at that rate, for say, 36 months, I would be looking at a monthly payment of $91.24 for the next three years.
I could decrease the term to 24 months and that would decrease my interest rate down to 3.98% then I would be looking at a payment of only $130.25 for two years. Ok, so what’s the problem?
In the world of personal loans, that is a pretty great rate, right? Credit cards don’t even offer that low rate. But in the real world, taking out a loan to “celebrate the holidays” is a terrible idea. Do you really want to pay $91. 24 for the next three years? And what about the two other holiday seasons that are within that three-year period?
There are plenty of ways to celebrate with friends and family without putting yourself into more debt.
First thing to do is PREPARE for it. The holidays come every year, at the exact same time. Yet, many folks find themselves scrambling again and again to find the money to make this wonderful time of year memorable.
Budget, budget, budget. I say this repeatedly for a reason. Create a line item in your budget for celebrations, whether Christmas, birthdays or even vacations, if you have a separate savings set up for these events, you won’t find yourself stressed out and can really enjoy these moments with loved ones.
Most banks and credit unions offer Holiday Clubs. And if they don’t, you can open a separate savings account and set up automatic transfers from your checking into that designated account with every paycheck deposit.
Even just $10 every pay period (if you get paid weekly) adds up to $520 at the end of the year. Increase that deposit to $20 and you are looking at $1.040. Wouldn’t it be great knowing that money is waiting for you to help ease the stress?
If you are someone who uses a cash back credit card, save that cash as a holiday savings account. Of course, this only works for those who pay off their balances every month. I went on a wonderful vacation this past summer using my cash rewards.
Start early! Buy a little at a time throughout the year. You can find some great bargains all year long. Purchase a couple of plastic bins, label them “Holiday Items” and designate a space in your home to keep them safe all year. I personally love doing this. It’s kind of exciting to see it all at the end of the year and know you’ve saved a ton during sales.
Scale back. Set up expectations with friends and family. There are so many wonderful ways to enjoy this very special time without breaking the bank. Some of my fondest memories are doing things that were low cost or didn’t cost anything. Here are some I really enjoyed over the years.
A google search is just a click away. The internet is filled with wonderful ideas.
You could start a side hustle or seasonal job and allot those funds specifically for the holidays. Put your talent to good use. Etsy is a great way to sell your crafts and make some extra cash.
The season of giving is good for the heart, but even in normal times it can be a burden on your budget. With the cost of basically everything we need to live increasing, this is not the time to set yourself back. We all want to show love and appreciation for our families and those that are closest to us but putting yourself in a financial burden is not the answer. If you find yourself in over your head, a quick chat with a financial coach may be what you need. Call, text, or email today for a free one-hour session.
Happy Holidays!
Here’s wishing you all the joys of the season and the happiness all throughout the upcoming year.
