Santa’s making a list, he’s checking it twice, to see if you’ve been naughty or nice…but he’s not bringing you a check to pay for this very expensive time of year.
When it comes to deciding whether to skimp and save versus taking out a holiday loan and pay the money back later, that decision is ultimately yours to make. Only you know how much self control you have when it comes to spending, paying on time, and avoiding the dreaded interest Grinch.
Let’s face it. Times are tough and every year fewer employers are handing out generous Christmas bonuses, so we can understand how tempting it might be for a parent to consider taking out a personal loan to give their family the holiday dinner, presents, and decorations they’ve always dreamed of. And everyone knows that taking out a personal holiday loan for things we don’t necessarily need can be risky. So here are some questions to ask yourself before asking Santa for an unsecured personal loan:
1. Will I be able to pay off the loan before next Christmas?
Although this question might sound like a bad joke, it isn’t. Many families who take out a loan to pay for an extravagant holiday vacation find themselves still struggling to pay if off while trying to buy gifts for next year’s holiday. Don’t let yourself fall into this trap. As a good rule of thumb, if you can’t pay off the loan by Labor Day of next year, don’t take the loan.
2. Will the money be used for things we actually need or just things we want?
Every holiday comes with unexpected expenses. Is your plastic Christmas tree starting to look like Charlie Brown picked it out? Are unexpected relatives coming to town and driving your food costs through the roof? Is it your turn to provide the majority of the food for your church’s Christmas gathering? Is your family planning a holiday reunion in another state? The bottom line is: What makes this holiday any different from the one before? If a family member was recently laid-off from work and the holiday gifts were already purchased using credit cards, a personal loan would be a great way to consolidate this debt before the interest starts to add up. So, think long and hard about the your wants versus needs when it comes to holiday spending. Your son may want a new Xbox, but he’d probably be just as happy with a few new games for the Play Station you bought him last Christmas.
3. Is there enough money in your monthly budget to make the loan payments on time?
If you decide to take out a loan this Christmas, make sure you have a clear plan on how you’re going to pay it back. Sit down as a family and discuss the things that you may have to sacrifice in the coming year in order to make your loan payments on time. Explain to your kids that if they want to fly across the country to spend Christmas with Grandma, then things like weekly trips to their favorite restaurant, new sneakers each month, and karate lessons may be out of the question this year. Not only does setting expectations for the coming year make it easier for everyone, this also teaches kids the valuable lesson of give-and-take when setting a budget.
If you’re considering a personal loan this holiday season, don’t go it alone. Speak to one of our loan matching specialists so they can get you the best rate possible for your individual credit situation. Loans can be scary, but with a little help from AmOne, you can have a very merry Christmas and a happy loan too.