For most people, the winter holidays are the most expensive of all. The whole month of December is filled with expenses that most individuals will not encounter during the rest of the year. From buying gifts and decorations to paying for winter creature comforts and holidays, the end of the year can be extremely expensive.
There are usually two methods that individuals use to ensure that they can afford everything that they need. Many start saving money a few months before the winter holidays, to have a larger budget for gifts. Others, resort to borrowing money from banks and various private lenders.
Unfortunately, almost all lenders capitalise on people’s need to borrow money during the holidays and market their products more aggressively, regardless of how expensive the debt may be. Borrowers get the loans, use the money to pay for expensive gifts and start repaying their debt once December ends. While this is not an issue in itself, it can cause problems for individuals who already have one or more loans that they need to repay. In the end, all the expenses can pile up and be very difficult to manage.
This having been said, there is a better way to manage your existing debt during the winter holidays and also to borrow money for presents without having to pay for expensive loans. Here is what you need to know:
- Consolidate Your Debt before November Starts
If you have multiple types of debt that you are trying to repay, getting a debt consolidation loan will be the best course of action. This will not only reduce the overall cost of the debt but also make it easier to repay the money.
However, the process of applying and getting one of these loans is not as fast as that associated with a personal loan. You will have to apply for the debt consolidation loan before the start of November if you want to benefit from the lower debt cost during December. The main reason for this is the fact that a debt consolidation loan needs to be secured against the borrower’s property, usually his home. This can only be done if the property is evaluated, which can take up to 2 weeks, depending on its size and the availability of the specialist.
- Pay off Your Credit Cards before the Winter Holidays
Credit card debt is often the most expensive type of debt that an individual might have. Keep in mind that once December starts, you may need to use the cards to purchase gifts, which means that you should first pay them off and start the month with a clean slate. If not, the debt will grow increasingly larger and more difficult to manage.
- Get a Personal Loan and Use It for Gifts
Avoid buying to many products that you have to pay for in instalments. While it may seem like a good idea at first, it will only put pressure on your personal finances and lower your credit rating. Instead, consider making a list of all the items that you need to buy and then getting a personal loan that can cover the entire expense. This will leave you with a single monthly payment that you need to worry about and a single interest rate.
- Don’t Pre-order Products and Wait for the Christmas Sales
Many electronics manufacturers allow individuals to pre-order phones, tablets, laptops, game consoles and games. Many websites also offer discounts for those who pre-order products and pay for them using their credit cards. There are two issues with this practice. First of all, the pre-order price is usually greater than the release price. Secondly, the credit card debt will be difficult to manage if you cannot repay it before the month ends.
- Use Online Lending Services
If you only need small amounts of money, from time to time, consider using an online service to borrow it. Several platforms enable individuals to get micro-loans that come with low interest rates and can easily be repaid the next month.