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Say "Bah, Humbug!" To Holiday Debt: Avoid the "Holiday Hangover"
Ah, the holiday season! Turkey and dressing, pumpkin pie, office
parties, jingle bells, and lots and lots of eggnog make the
season a delight. But all fun and reindeer games aside, you have
to be careful to make sure you don't wind up as poor as Tiny
Tim! Americans can spend as much as $1,000 a year on gifts for
family, friends and business associates. That is a big chunk of
money that can hit you pretty hard come January if you don't
plan ahead. There are some tips and tricks you can do to keep
your holidays bright and debt-free this year.
Before the holidays arrive, do some careful plotting and
planning for family and business expenses. A few hours spent in
preparation can mean less money spent on gifts. You don't have
to be Scrooge, you just have to be smart.
1) Decide how much you are willing to spend, and stick to it.
Pretend you are spending cash. How much can you afford out of
pocket this month? If you cannot afford it right now, consider
that you cannot afford it at all.
2) Budget non-gift and after-Christmas items too. Remember to
include other things you buy over the holidays - cards, stamps,
candles, a tree, decorations, and food galore. Plus, plan ahead
to save some money for next year by taking advantage of after
Christmas sales. It is all part of your holiday spending, so
plan for it in your holiday budget.
3) Make a list of everyone you will be buying gifts for and
estimate how much you want to spend on each person. Include the
smaller gifts for teachers or your mailman. Include the price of
cards and stamps, because Christmas cards count as gifts when it
comes to your budget. Then, add it up and compare the total to
your budgeted amount. Make the necessary adjustments. Your
brother-in-law may only get socks this year.
4) Cut down your list. This may sound harsh, but look closely at
who you are buying gifts for. When saving money is an issue, it
is ok not to give gifts to everyone you know. Send only cards to
distant relatives, neighbors you don't know well and business
owners who haven't bought from you this year.
5) Be creative. Determine if some people would be happy to
receive home baked cookies. Remember, the holidays aren't about
presents but about good will towards man. Good will comes in
many forms and does not always need wrapping paper. If you have
a skill or a hobby, use it: needlework, knitting, art or poems.
Make a photo album, or offer to plant their garden. Use discount
coupons for your customers.
6) Carry your shopping list with you. Take every opportunity to
shop. Start early and try to get things before the rush, before
highly sought, hard-to-find items go up in price, and before you
can't find what you need. This gives you a chance to comparison
shop. It also takes away some of the stress and reduces your
risk of overspending just for the sake of finishing your
shopping.
7) If a store offers free gift-wrap, go for it! It'll save you
time and money on buying wrapping paper, tape, bows, and cards
and struggling with it all yourself.
8) Have willpower. Stick to your estimates and you won't go over
budget. eBay is a wonderful shopping tool if you remember to
start early enough to account for shipping time. Find
the right
item, bid your budget price and leave it. If someone outbids
you, don't get into a bidding war, just bid on something else
within your price range.
9) Increase your income for the season. During the holidays
there are lots of ways to make a little extra money. Many stores
hire part-time workers for the holidays. Since it is a party
season, babysitting is in high demand. Be imaginative. You could
be the Official Gift Wrapper in your neighborhood and wrap gifts
for friends and neighbors for a small fee.
10) Use your credit cards. Yes! If you stick to your budget and
only spend what you are able to pay for in the next 30 days,
then yes, you CAN use credit cards. The key is to use them as
you would cash. Using your credit card is not a way to buy
things you can't afford, it is a way to organize your spending
and possibly get some rewards and discounts along the way.
11) Make the credit card companies compete for your business. It
may be the holidays, but you can dig in your heels and play
hardball. Call your credit card bank and tell them you won't be
using their card for your holiday purchases unless they sweeten
it up for you. You want a little sugar and spice to make using
that card a better deal. You can ask for 0% interest, double
your gas points or flyer miles. Anything to make using your
credit card more worthwhile. Banks will usually be willing to
strike a deal with you, so long as you try. It can't hurt to ask.
12) Use specialized credit cards, but carefully. Many of the
stores where you will be buying your holiday gifts offer their
own credit cards. They tend to have ridiculously high interest
rates. However, they may give you discounts of 10%, 15%,
sometimes even 20%! So, you could actually go ahead and use a
store credit card to make the purchases and get the discounts,
since you are paying these off when the bill comes due the
interest rates should not be a problem. If you do get into a
pinch and can't pay them off right away, then transfer your
balance to your lower-rate credit card before any interest is
added to the higher-rate one. You need to be on the ball with
this trick, but it may save you money.
It is important to keep in mind that every new credit card you
apply for will lower your credit score. So if you're saving up
for a mortgage or a large loan, you'll want to avoid applying
for additional credit. Come the start of January, your main
concern is going to be getting ready for the new year, and you
won't want post-holiday money troubles making things worse. The
Ghost of Christmas Past starts visiting even before you put the
tree in the trash. Be sure to have a Happy New Year by being
money-wise in advance.
(c) 2005 DebtGuru.com(r). This article may be freely distributed
as long as the signature file and active link are included.
About the author:
Michael G. Peterson is the Vice President of American Credit
Foundation, an IRS 501 (c)(3) non-profit consumer credit
counseling organization that has assisted thousands of
individuals and families with their financial situations through
seminars, education, counseling services, and debt management
plans. For a free holiday spending guide visit
http://www.debtguru.com/hbooklet.html