I know that for some people, Christmas isn’t even on the horizon, but for others, the credit cards are already out and the spending has begun. It’s a financially daunting time of year for many people, but the idea of having lots of presents under the tree is important to some people as well. With that being said, I can’t stress enough how important budgeting and deal finding are. Although over-spending for Christmas can seem exciting and fulfilling at the time, the new year will always arrive and the bills will start rolling in. We always see an influx of clients interested in bankruptcy in the new year as it’s then that many clients realize how far in debt they are.

I also want to warn you about payday loans. I understand why people are interested in the idea. People need money now, so they are given money. But before you take the plunge into the payday loan cycle, do your research. Trust me, if you can’t afford something, getting a payday loan is not the way to go.

The way a payday loan works is that the borrower usually takes out a fairly small loan and usually pay it back by their next pay day (hence the term “payday loans”. These lenders have made it very easy for unfortunate debtors to get these loans. For the most part, lenders just ask that you can prove that you have three months of continuous employment, have a proof of address and have a chequing account. That’s it. Easy peasy. Sounds great so far. Well, here’s where the issues arise.

Payday loans are expensive. They should definitely not be your first borrowing option. These lenders can charge up to $21 for every $100 you borrow. That’s an obscured amount of money. Not only that, but payday loans usually result in a “never-ending cycle”. The fees that go with payday loans accumulate quickly and many people end up taking out a second payday loan just to pay for their first one.

With the holiday season on the horizon, it’s inevitable that people will panic. Many people are going to be looking to payday loans to help them through the holidays. I encourage you to re-evaluate your budget and if you are still struggling, look for other ways to borrow money. Ask family, friends, banks, etc.

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