Pawn shops have seen a twenty percent jump in pawns and sales this month as Canadians look for ways to make some extra cash. Store owners explain that this is not unusual, but increasing levels of debt make pawning more popular. Persons who want to take an emergency loan sometimes use holiday gifts as collateral. Thus, they exchange gifts for cash.
Part-owner of Nanaimo’s Stock Exchangers Alayna Gjelsten explains that people do not always get receipts on gifts, and they resort to pawn shops to sell them. She also notes that more people have started placing loans against smartphones, electronics, tools, and jewelry as to pay holiday bills.
People overspend during the holiday season and then need money to pay the bills, said Gjelsten. When clients repay their loans in 30 days, they can get their items back. If they cannot afford to pay back with interest, the pawn shop sells them. The good news is that this does not show on their credit history, adds Gjelsten (Canada.com).
Why do people resort to pawn shops to begin with? According to assistant professor of marketing Cynthia Cryder at Washington University’s Olin Business School, the reason is that people make wrong decisions when it comes to paying holiday bills and getting rid of debt. Many people choose to close small debt accounts, even such with a low interest rate, and keep paying off large loans with high rates of interest. Research has confirmed this and in fact, participants in a study did not use low interest cards to repay loans with high interest rates (Consumer Affairs).
Paying high interest loans is one strategy to pay off holiday debt. Saving money to repay debt is another way to help you deal with holiday bills. One strategy is to pick an item, for example, a dinner out or a trip to the coffee shop, and cut it out of your budget. This helps save money and doesn’t change life very much (Life Inc). Other ways to deal with debt, apart from pawning useless gifts, include ignoring New Year Sales and unsubscribing. If you maxed out your credit cards, you shouldn’t be shopping even more. You may find deals galore, true, but the fact is that you will be spending money you do not have. Why not spend time with family and friends instead? If you were shopping online for the holidays, your email is probably full of reminders that this week only you can enjoy free shipping or get 50 percent off. While such deals may seem enticing, it is a good idea to get off these lists. You will find great deals in the spring when you’ve paid off your credit card debt and can afford to splurge a bit. Finally, you may want to make a list if you really need tech gizmos, household supplies, or new clothes over the next couple of months. Think of what you are willing to spend and on what and stick to the list. Do not purchase a plasma TV if all you need is a mike for your computer (Rate Supermarket).