Monthly Archives: November 2017

Short Term Loan Offers during the Holidays Can Seem Appealing, Avoid These Mistakes

With the holiday season approaching, the idea of taking out a personal loan may have cross into your mind. Taking out a loan to pay for holiday expenses may seem like a good deal when you have the income to pay back. But, if you take out a loan, you will be putting an additional financial burden for you to carry.

It is likely that you won’t pay back in full at the month end and you will roll over the balance from month to month just like what most people do. Doing so can increase the debt you already have and reduce the amount of cash flow you have. For this reason, it is not wise to get a personal loan just for the sake of your holiday indulgence.

Many people spend lots of money on various expenses during the holiday season including home renovation, holiday decoration, holiday trip, and holiday gifts. All these cost money and the best way to tackle the expenses is to start saving early. You can lay out a plan on how much you are going to save each month so that you reach your savings goal when the time comes for you to do your holiday shopping.

To arrive at your savings goal, you must stop spending money on things that you don’t need to buy. Many people have unnecessary expenses and cutting back on these expenses will have helped you to save a lot of money. You can use a budget app to help you keep track on your expenses and stay on track to your savings goal. Alternatively, you can also keep a budget journal where you record down all your expenses.

By using your savings to pay for your holiday expenses, you don’t have to worry about how you are going to come up with the money to make the repayment. Not being able to pay back on time can result in debt collection and possibly bankruptcy. If it is necessary for you to take out a personal loan, make sure you do research and compare the loan offers carefully. Most people will just compare the interest charges but there are many other fees that you need to take into account.

You should think first whether you can cut down some expenses that allow you to cover all your holiday expenses with your savings. You can then borrow the remaining amount for supplementing the savings you already have to cover your holiday expenses. As a rule of thumb, you should never apply a loan if you have no confidence to pay back the loan amount. The monthly payment amount should not be more than half of your income so that you won’t sacrifice other more important financial goals.