Posted December 24, 2017 01:04 am

Financing Your Holiday Purchases

Many people will sit down to create a holiday gift list before they head out to local stores or sit down in front of the computer to make online purchases. By doing so, you may realize that you have numerous people to shop for, and you only have a limited amount of money available to use for gifts. This type of situation can create stress, but financial stress and anxiety may not be necessary. You understandably do not want to overlook anyone on your gift-giving list because of a lack of money. With this in mind, it is critical that you develop a solid plan to pay for the gifts that you need to purchase.

Give Meaningful Gifts to Keep Costs Low

Before you look at financing options to pay for your gifts, you should determine how much money you actually need. This means that you need to think about different and creative ideas for each person on your list, and you need to assign a dollar amount to those items. Rather than look for the most expensive gifts that you can afford, consider looking for meaningful gifts. These may be gifts that are based on their hobbies and interests, their needs or something else personalized specifically to them. People can tell when you put meaning and thought into your selection of gifts, and this can make the gift seem more valuable to the recipient. This is the true goal of gift-giving, and it could save you money overall.

Use Cash as Much as Possible

If you make your gift giving list well ahead of time, you could pay for some or all of your gifts with cash. Some people even start saving for the holiday season as early as January or February each year. Examine your savings account, and look for extra money available in your checking account. It may even be cost-effective to sell some stocks or other assets to pay for as many gifts as possible before turning to financing. If time allows, you could take on a second job a few months before the holiday season to get extra money for holiday gifts and other related expenses.

Think About Credit Card Financing

Despite taking these steps, many people will still run short on cash during the holiday season, and they need to find an effective and affordable way to financing at least a portion of the holiday’s expenses. Turning to credit cards is seemingly the best option available. After all, you may already have a credit card in your possession with available credit on it. However, this credit card may have a very high interest rate and revolving term. These two factors could potentially make it difficult to pay your financing off in the months to come. Remember that the benefit associated with credit card points and cash back on purchases may not be as significant as you may think it may be.

Apply for a Personal Loan

A better idea to finance your holiday purchases is to consider applying for a personal loan with a fixed term. A personal loan may have a lower interest rate than your credit cards have in many cases. More importantly, the term may be fixed. With a fixed term loan, the entire debt balance will be paid off at the end of the term. You do not have to worry about carrying your holiday debt indefinitely because you will have a firm financing payoff date to look forward to. Many personal loans have an easy application process and could result in the availability of money very soon.

The best way to pay for your holiday purchases this year is to combine several of these ideas together. For example, you can shop for more affordable yet meaningful gifts to reduce costs, and you can use some of your available cash to pay for a few of the gifts. You can then apply for a personal loan with a fixed term to pay for the remaining expenses. Remember that you can also start budgeting for your gifts next year by saving a small amount of cash each month. It is never too early to start thinking about next year's holiday gifts.