Taking out a loan is a big deal and it could have major impacts on your life for months or years. For this reason, you need to think carefully and clearly before you sign for that loan. Here are some things to think about.
Can You Afford The Loan?
The very first thing that you need to do is consider whether you can afford to take out a loan for the holidays. Even if you need the money, you have to make sure that you will not be in a worse position when the season is all over.
Hopefully, you have a written budget, but if not, get one. Nothing fancy, just write out a list of all of your fixed and variable expenses. Include set amounts for things like entertainment, food and fuel. When you have your list, insert your expected loan payment and see how things look. If things are tight, you need to turn the loan down or make some changes.
If you are dead set on the loan and things are tight, you need to either decrease your bills or add some income. There are dozens of ways to save money like cutting your food budget or shopping for better car insurance. Income is also easy to add, particularly with holiday seasonal work.
What Do You Need The Money For?
Next, take a look at what you need the money for. It it is just to buy more gifts, you might be better off making some cuts this year.
Instead of going all out on your gift giving, give less, people will understand. Instead of buying your husband a new welder with a loan, get him a new hand tool. Instead of getting the kids a new game system, buy them some games for their current one.
This has been a difficult year for many and nobody will fault you for giving less this year. If it means passing on a holiday loan and being better set for the next year, doing without might be the right call.
Can You Get The Money Elsewhere?
Another thing to consider is whether or not you have any other choices. A loan is quick and easy, but putting in a little effort could save you all of the interest and/or fees.
The easiest way to get the money that you need for the holiday is to sell some unneeded items. The easiest way to do this, if you have enough stuff, is to hold a garage or yard sale. Just a few hours spent in a folding chair on Saturday and you could have all of the money that you need.
Another way to get your holiday money is to take on some seasonal work. Even in a down economy like we have now, retailers are hiring for seasonal positions. It might not be the most fun work, but most of these places start at 13 dollars an hour these days. Just 10 hours a week can earn you almost 400 dollars in just three weeks.
Is The Cost Too High?
If this is going to be a holiday loan for bad credit, you have to consider the cost of the loan. There will be high fees and/or interest, so you need to think clearly here. Do not let your holiday aspirations cloud your judgement.
What cost is too high? That is something that you must decide, everyone is a little different. If the loan is for 900 dollars and you need 1800 dollars to pay it off, is that too high? Some would say yes and some would say no.
What Does Your Future Look Like?
Finally, you have to think about what your future is going to look like, economically. We can see a light at the tunnel nowadays, but it still might take years for the economy to truly recover.
You might be able to afford a holiday loan right now, but will you be able to keep making that payment in January or March of next year? Unfortunately, in today’s economic world, these are things that must be considered.
Is having a good holiday this year worth struggling during the next one?
Making Your Holiday Loan Decision
Once, you have answered all of the questions above, you can make a decision as to whether or not to take out a holiday loan. Just be sure to think carefully and look behind the short term for a more secure long term financial picture.