Christmas Loans

The Holiday Borrowing Risk List

Ch. 4. Building a Holiday Budget

If you don’t want to take out loans for the holidays, you’re going to need to have a budget. What’s the hardest part about having a budget? Sticking to it. It can be easy getting caught up in playing Santa or splurging on meals with friends, but if you’re able to fight off the temptation to overspend during the holidays, you’ll be happier year-round.

It’s easy to be lured into great sales and adding extra people to your list, but once you make a budget for holiday gift-giving you should try your best to stick to it.

In 2016, parents spent about $422 on gifts per child, and about 16 percent of holiday shoppers said it would take six months or more to pay off debt the accrued during the holidays.27

Make a plan: Write out a list of the things you want to spend money on and how much you want to spend for each category. Here is a list of some of the most common holiday expenses:


Gifts (List amount per person)
Gas and travel expenses
Holiday decor
Charitable offerings
Holiday photos and cards
Holiday clothing

Once you decide who you are giving gifts to, you can tighten the reigns of Santa’s sleigh even further by setting dollar limits for different family members, co-workers or friends. This LA Times interview with an etiquette specialist outlines reasonable ranges for holiday gifts to nieces and nephews, cousins, teachers, coworkers and more.

Advice from Bruce McClary (@brucemcclary): “It’s crucial to have your expenses prepared, not just for the holiday season but year-round, so that they fit within an affordable spending plan. You want to have enough income to support your necessities, but enough left over for some of the other things that you may want: entertainment, travel, gifts. Before you even look at a new credit card or loan, sit down and write a budget, it’s never too late to make a budget and a plan so that you know what you need and don’t borrow too much.

Once you make your budget and see how much you may need to borrow, start checking interest rates, fees and look up the reputation of the lender. The old saying is “the devil is in the details,” and that rings true when it comes to credit card and financing offers. You want to be very careful that you’re not in a hurry when you’re choosing a credit card or signing up for a loan. Be competitive about the process, find what is affordable and meets your needs.

Warning signs for predatory lenders are extremely high interest rates, which can vary from the low end of 28 percent and go into the triple digits in some cases. It really is worthwhile to dig in and read the agreement that you’re signing up for and look beyond the interest rate, some loans or cards charge fees for things like talking to customer service or receiving a paper statement, so even if you get a low interest rates you might get nickeled and dimed, and those fees add up. If it sounds too good to be true, it probably is.

Even if you don’t have the best credit, there are options available if you do your research. Online lenders, credit unions and credit cards can be viable options, if you know all the terms up front and it fits within your budget. If you do find yourself in a situation where you can’t make your payments after splurging on the holidays, there are resources available to get your financial health back on track! The National Foundation for Credit Counseling can connect people to expert advice to talk through their specific circumstances, so that consumers can be empowered to secure their financial futures.”

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