Financial Resource Center

Money Management

Find Real Financial Peace This Holiday Season

by Laura Varela / November 7th, 2019

It's easy to want to spend more than you have during the holiday season. While a great present doesn't always come with a high price tag, all too often, many of us spend more than we can afford.

The average American will spend $1,048 this holiday season, according to the National Retail Federation. Ideally, that money will come from savings, but for many people, it will mean going into debt. But there's debt and then there's cataclysmic debt.

Many predatory lenders prey on the insecurities of cash-strapped families this time of year. One loan website said, "In the end you would not want your kids to know too much about your poor financial situation, especially when their friends get lovely gifts."

People turn to payday loans because they're quick, require no credit check, and they don't have to ask family or friends for money. These borrowers generally don’t understand the exorbitant interest rates and hidden fees these lenders charge. If the borrower can’t pay off the loan and fees in 2 weeks, the amount is “rolled over” and additional fees are added. For a loan of $375, the borrower could end up paying $529 in interest and additional fees in just 5 months.

Most people will agree that the best gift for this holiday season would be peace of mind. Here are some realistic ways to achieve that: 

Avoid Really Bad Debt — Ideally, throughout the year, you will save all the money you need for your holiday gifts and travel expenses. But if you've cut everything you can, and you're still short, you have better options than a predatory lender. Ask your financial institution if it offers a "skip a loan payment" program. For a small fee, many lenders let you skip a payment and tack an extra month onto the term of your loan. It's not ideal, but if the loan is low-interest, it's better than a payday loan. 

Plan for the Future — Open a savings account so you're ready for next year's holiday season. Holiday or Christmas club accounts are short-term savings accounts that let you set aside a little bit of money each month. To open one, decide how much you want to save, divide that by the number of months until the holiday, then set up a direct deposit to automatically add that amount to your account each month. Saving for the holidays will enable you to avoid using credit cards and racking up interest charges.

Join a Credit Union — As not-for-profit financial cooperatives, credit unions offer the same loans and accounts other financial institutions do, but at better rates.  Their primary mission is service, and they're committed to helping you thrive financially. If you’re not already a credit union member and would like to learn more, check out Your Money Further

The holiday season is meant to be a joyous time of year, not a time to worry about debt. By planning ahead and taking advantage of the services at your local credit union, you’ll build a strong financial foundation so you can enjoy the holidays year after year.


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