For many, the cost of a marriage is unreal, easily surpassing the thousands of reais. If you doubt it, try researching how much it costs to rent a wedding gown. In the face of despair and, almost always, pressure from family and friends, many couples feel obliged to marry. Some of these couples resort to financing marriages through loans or other financial means, ending up indebted.
Surely you know a story like that. It may not have been a wedding, it might have been a birthday party, a debutante ball or even a graduation: a wonderful party that resulted in debts for who organized it. Of course, the experience of the party is always worth it. But to bear the financial consequences afterwards is not at all amusing.
A wedding loan is essentially a personal loan, as well as loans for beginners dances and graduations. You will have to prove income, a risk analysis will be done by the financial institution and they will make a certain amount of money available for your party. In some cases, there are companies that divide the parties into several monthly installments. This is a way to disguise the interest on a loan and make you pay more and more for a party that is worth much less.
The Problem of Holiday Loans
The fact is that the more money we have, the more money we want to have. In the matter of parties, more specifically, the bigger the party you can make, the bigger it will be, making you spend even more. This happens both because you do not have the money “in hand” making the least “painful” expenses in your pocket, and the excitement of bringing all friends, family and acquaintances to the party.
One good savings strategy is to charge 50% of the cost of the guest party. After all, they will enjoy the party more than you. (Photo: communicationisthekey.com)
Dangers of Party Loans
Even if you do not have options and a party is a necessity, analyzing the dangers will help you get your feet on the ground. This means that you will care more about your pocket, your money, and plan the party in the best way possible.
You should throw a party without draining your savings. Party, except in case it’s a party for you to make money from it, it’s an expense with entertainment. If you have built good investments and have an emergency fund ready, you may not want to spend everything at a party, for more sentimental value than it does. Limit any party spending to a maximum of 10% of your available capital. Example: you have 10,000 in investments and emergency fund. For the party, then, you have only 1 thousand and nothing more besides.
Loans from friends and family. In many cases, family and friends can volunteer to help. If this help is free, great, it’s more money for your party. If she has to pay herself back, be polite and refuse. Even without interest, making debts with friends or family can be a lousy deal.
Interest rates. While you are paying interest on a holiday loan, a smart investor is making compound interest on an investment. Interest rates in Brazil are too high for loans, making borrowing money too expensive and will not even compensate for the best party in the universe.
Loan limits. Getting a loan can hurt your access to lines of credit for really important purposes, such as buying a vehicle for work or a property for your family. These are goods that last much longer than the hours of a party.
After the party, debt begins. Especially for those who hold a wedding party, you will not want to start your first day as a couple already in debt. The hangover will heal at most in a few days, since the debt will not.
Even if the whole money goes out of your pocket, without making a loan, you are taking on a large amount of debt for a few hours’ event. You may well do something smaller, within your means, or postpone the party for a moment of financial reassurance. Everything planned is much cheaper and is much more profitable, both in the short and long term.
As an example, a friend took a loan for his wedding party and today finds himself having trouble investing in his own business. If he had planned, he would know that the loan money would get in the way, and the party would only be remembered. Of course, you want to give the parties that everyone will remember for the rest of their lives. But can not you do this with a Sunday barbecue ending with a lual at the beach house of some friend? Or a weekend trip to the house in the family mountains? Think, rethink and be rational when deciding where to put your money.
Already got into debt for a party? How did you get out of this mess? What do you do to plan spending at parties?