As the holiday season approaches, families often face financial challenges. These include overspending due to social pressures and impulse buying, which can result in debt and financial stress. Additional difficulties arise from inflation, increased costs for gifts and travel, and the expectation to maintain costly traditions. To address these issues, you should establish a budget, begin shopping early, and look for affordable or free alternatives to expensive gifts and celebrations.
Common financial challenges include:
- Overspending and debt: Pressure to exceed one’s budget, often through credit card use, can lead to persistent debt.
- Inflation and rising costs: Economic factors have made gifts and hosting more expensive, affecting overall affordability.
- Emotional pressure: Social media, cultural expectations, and the desire to show appreciation may drive emotional spending and guilt if expensive gifts are unattainable.
- Last-minute shopping: Delaying purchases can result in higher prices and fewer opportunities for cost-effective choices.
- Unexpected expenses: Seasonal costs such as travel, decorations, and hosting can accumulate quickly and may coincide with other financial obligations, such as property taxes or vehicle registration.
Stores that offer rent-to-own or lease-to-own plans often promote what they think are benefits: choice of different repayment periods, no credit check, automatic withdrawals, and fast approval. But that convenience — for example, getting to use a washing machine while you’re paying it off — can mean you pay twice what you’d pay in cash.
QUESTION: What is a “Buy Now, Pay Later” plan?
It’s a way to get something now and pay for it over time. You pay part of the price up front, then make regular payments to the company that manages the plan. The company pays the store, and you pay the company back.
QUESTION: What are rent-to-own plans?
These are often used for things like furniture or electronics. You sign a contract, make regular payments, and get to take the item home right away.
QUESTION: Do these plans check my credit?
Some do, but others don’t. It depends on the plan.
QUESTION: Are there fees or interest?
Many plans say there’s no interest or fees, but most charge fees for things like late payments or changing your payment date.
QUESTION: What happens if I use autopay?
If you use autopay and don’t have enough money in your account, you could get overdraft fees.
QUESTION: Can this affect my credit score?
Your payments might be reported to credit bureaus. Paying on time can help your score; missing payments can hurt it.
QUESTION: How do contract lengths affect payments?
Longer contracts mean smaller payments each month, but you pay more overall because of extra fees. Shorter contracts mean bigger payments each month, but you pay less in total.
QUESTION: What if I return the item?
Usually, you don’t get back the money you already paid.
QUESTION: What if I miss a payment?
You might lose both the item and the money you’ve paid so far.
QUESTION: Are these plans a good deal?
They offer flexible payments and quick approval, but you could end up paying much more than if you paid cash.
