You may be considering using some type of financing for Christmas expenses. It is interesting that before doing so, you think a bit: we help you to do it.
The financing of Christmas expenses , or, of holiday expenses in general, is certainly not something strange. Many people have used and use different methods to finance such expenses. However, in most cases it is not a good idea.
The risks of financing Christmas
When we talk about financing Christmas , we do it from the perspective of requesting or using financial products that offer us money in exchange for an interest , and, often, some expenses.
Two clear examples are the use of credit cards or personal loans .
In both cases we use money that we do not have, credit, to make purchases or assume expenses. In both cases, we must return this money within a certain period of time with specific interests.
A priori the option may seem interesting since access to credit allows us not to modify our expense / income ratio in the present and defer these expenses in the future. And that’s where the problem lies.
First of all, every time we buy something on credit, we are assuming a higher cost than the product has . We will pay more because the money borrowed to buy the product will add interest and expenses if applicable. This means that the cost of what we are going to acquire will be higher than the real cost, the purchase is no longer good for our pocket itself.
On the other hand, in fact, we defer payment, that is, we do not assume it at the moment and we delay it in time. The problem lies in what that payment over time can mean to our personal economy. In fact, the misuse of credit cards is one of the main causes of over-indebtedness of family economies. That is to say, to assume more expenses than we really must assume and that these derive in more debt than we can bear.
Imagine a scenario in which you have used your credit capacity to finance Christmas, and, in January, an unforeseen event arises that forces you to need another significant amount of money. You may not have creditworthiness, or, your level of indebtedness may increase to unbearable limits.
Alternatives to Christmas financing
The main alternative to financing Christmas is undoubtedly the forecast and where appropriate the savings.
When, for example, our economy is healthy thanks to savings, and, we have an emergency mattress, retirement savings, and savings options by objectives, we can perfectly plan the expenses for the whole year.
This is much easier than it might seem, but, part of an important reflection on the relationship between our income and expenses. Discovering that frugality and minimalism are good for your finances and the whole of your life, is undoubtedly interesting in this aspect.
You can perfectly plan throughout the year how much money you can afford to set aside and save for Christmas expenses , or vacations. This money, in addition, can be working well in savings insurance or another product that offers you profitability during the year.
In any case, to the forecast and savings, common sense must be joined . Although they are dates in which we tend to think that after all they are only a few days a year, the truth is that if we do not have the capacity to assume certain expenses we should not do so. Therefore, being able to adapt to the economic reality of each one is another important alternative in this case .
What if I have no choice but to finance Christmas?
If with all the above, you have no choice but to go to the financing to assume Christmas expenses, you should do so with the greatest possible precaution.
First, value the possibilities you have of accessing deferred payment cards without interest. In the market there are many options that will allow you to postpone 30 days or even 60 days, without charging interest on the provisions, provided they are purchases and not cash provisions .
If you have to go to a loan, try first to assess those options closest to your usual financial products . For example, payroll advances or payroll advances offered by some payroll accounts can be much more interesting, because they do not carry interest, than going to fast loans. Fast loans, far from being an interesting option in this case, are one of the most expensive products on the market.