Say "Bah, Humbug!"
to
Holiday Debt
Avoid the "Holiday Hangover"
by Mike Peterson
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.:
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