How Can I Avoid High Cost Loans This Christmas?
The Christmas season can be a financially draining one, and this may be the case more than normal this year, following the financial consequences of the Coronavirus pandemic. With incomes falling, consumption has also slumped, with US consumption rates having fallen by just over 30%. While you may be tempted to take out a loan and go full steam ahead with the festive shopping and Christmas gifts, this is an expensive method and you should consider alternative options before deciding to do this.
How Can I Avoid Taking Out A Loan?
One basic but effective tactic is to plan! If you plan your finances ahead of time, expenses become more manageable as you can work your other costs around it. The average US shopper is expected to spend an average of $998 on gifts and other expenses this holiday season according to the NRF Holiday and Seasonal Trends Survey. Being aware of these impending costs allows you to put money aside ahead of time, such as by cutting down take-out meals or choosing to walk to work over getting the bus.
One simple way of planning ahead is through creating a clear budget for yourself. This can be done manually through creating a balance sheet, illustrating your incomings and outgoings. This will allow you to strategize your seasonal spending and ensure you have enough to celebrate as you planned without worrying about needing an expensive loan and encountering debt.
Otherwise, you could download a budgeting app to your smartphone or tablet. These are designed to assist you in planning and saving money. These apps will categorize your spending for you and show you where you can make savings simply. You can also schedule automatic payments from your current account into a savings account, to fill the jar for when you need it, with Christmas being a likely target!
What If I Still Can’t Afford To Cover The Holiday Costs?
If you are still struggling to make ends meet this festive season, there are lower cost alternatives than your typical high-cost loan. According to a new survey’s findings, 56% of US shoppers have recently made use of buy now, pay later services, such as Klarna. These allow you to defer payments, and while interest is usually applied, this is typically less expensive than seeking a loan from a high-street lender.
However, you should use these services carefully. 46% of the shoppers who have utilized these installment payment services recognized that they would have spent less if this tool wasn’t at their disposal, so be careful!
Any Other Tips?
You should keep an eye out for festive offers such as Buy One Get One Free deals, as well as shopping around before settling on expensive purchases. Small savings really do mount up.
If you do find yourself in urgent need of a loan, you could talk to friends and family who may be willing to support you with a loan. This could be less expensive than your average loan, while being more flexible and won’t leave a mark on your credit score.