Person-to-Person Loans vs. Credit Overindulgence

Posted by Mike Smith :: November 22, 2007 @ 6:57 am

How many of us will overeat again today? With the variety and quantity of food that is often available, it’s hard to imagine a Thanksgiving when we didn’t eat to the point of nearly making ourselves sick. While we may give in to such temptations a few times a year, we can all agree that such overindulgence in food on a regular basis would likely be detrimental to our health. In a similar way, repeated overindulgence in spending can have significant consequences to our financial well being.

This is the time of year when spending can start to get out of control. It seems like there is a sale going on from now until the end of the year, at least. We see so many other people out at the stores doing their holiday shopping that we may want to join in the fun. Unless you’re of a particularly frugal mindset, and feel the subsequent pain of spender’s guilt, spending money probably makes you feel good. Spending money on other people may make you feel even better, since there’s joy associated with generosity as well.

Remember that spending money is not necessarily a problem. It’s spending more than you can afford that leads to trouble. I recommend planning your holiday spending ahead of time. You can create a mini-budget if you like. List all of the people you hope to buy for and allocate an amount of money that you will spend on each. You should try to overestimate each expense, or include an extra category for people that you may have forgotten or if gifts end up costing more than you anticipated. Having a plan may not make it any easier to find the perfect gifts, but seeing the numbers in black and white may help you to avoid the “one more helping of stuffing isn’t going to make things worse” mentality. Every purchase adds to the financial burden that the holidays can bring.

Ideally, your holiday spending should not exceed the remaining unspent amount in your gift category of your regular budget, which you hopefully have. If you do overindulge in your spending this year, or if your current debt makes even reasonable spending beyond your means, try to refrain from turning to credit cards to fund your holidays. Lending Club’s rates on person-to-person loans will probably be much more affordable. Having a person-to-person loan will give you a set amount of cash upfront which may help you to limit your spending. While the pain of a large meal - or sporadic shopping trip - can usually be overcome, surviving regular such occurrences is much less likely.