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Money, Banking and financial market As the end of the month approaches, you realize that you probably will not be able to pay the next month’s rent. Describe both an informal and formal financial instrument that you might use you to solve your dilemma.

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Asher Wismer eNotes educator | Certified Educator

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A significant informal instrument you could use to pay your rent is one that many people -- myself included -- don't bother with, because it takes a little time and effort: sell some stuff! Everyone has spare stuff lying around they never use; I have tubes of posters from my theater job that I haven't looked at in months! Dave Ramsey, the financial guru, recommends looking at everything you pay a bill on; if you have a car that you're paying off, sell the car and buy a junker.

To formalize this option, you may pawn your items and buy them back at a later date. The contract you enter into with the pawn shop is informal itself, but the selling is not to a private individual and so it is "formalized" by the nature of commerce.

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brettd eNotes educator | Certified Educator

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I think the most common informal manner of dealing with an unfortunate situation like this is that some people simply don't pay the rent, don't tell the landlord, and hope they can scrape together enough, soon enough, that they don't get evicted.  I find...

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