Christmas can often times be a financially daunting time of year for many people. Some people are struggling financially but the idea of having lots of presents under the tree is also important to some people as well. 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.

Christmas is in five days and it’s inevitable that people have already started panicking. Many people are either going to be looking to payday loans to help them through the holidays, or they’ve already gone this way. I encourage you to re-evaluate your budget and if you are still struggling, look for other ways to borrow money, even if it means asking friends, family for a loan. Anything is better than Payday loans.

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