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1. Never Neglect Your December Payments
During the holiday financial crunch, many consumers sacrifice making payments to their creditors, choosing instead to apply that money to gifts and other expenses related to the season. This is a bad idea. Late charges and over the limit fees are very costly, and just not worth it. Additionally, many creditors will raise your APR well over 20% with just one late payment. It is just not worth it. To avoid paying a heavy price later on, you should factor in your December bills when you draw up your holiday budget.
2. What Did You Spend Last Year?
What’s the best way to get you motivated to budget for Christmas? Go over your holiday bills from last year. Remember to include not just gifts but all holiday-related expenses. Add them up. Use our worksheet [link] to help you get organized.
3. How Much Can You Afford to Spend This Year?
You want your holiday to be financially comfortable, not a stressful economic squeeze. Before you write out a list of gift recipients, review your budget and determine how much you can afford to spend without relying on credit cards. If you need to economize, examine all of your expenditures for the past month, and assess the best way to cut back, starting now. Put whatever you save into a holiday fund, to be used for this purpose only.
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4. Be Prepared With a Spending Plan
Categorize all holiday-related expenses and list them. Don’t forget to include wrapping, postage, decorations, food, clothing, charitable donations and so on. Then, write down how much you anticipate spending for each. Have you exceeded your budget? If so, then prioritize your list, and start to cut back so that your purchases will be affordable. Your goal is to pay cash. If you must use credit cards, then remember to budget for higher monthly payments starting in January so you can get rid of the debt quickly.
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5. Santa Knows Best: Make Out Your List, Then Check it Twice
Plan your gift list well in advance of the holiday rush, and you can avoid most of the unnecessary spending incurred by last-minute shopping. First, break down your list into three categories: Definite, Possible, and Really Not Sure. Start with the first group. As you determine what you would like to buy for each person, write it down. Include the approximate cost of each item. Compare it with your budget, and what you have allotted for gift-giving. If you have monies remaining, then move on to the next group, and so on. Establish your spending limits now.
6. Stay Within Your Budget
You have two choices here. Pay cash. Use your pre-determined limit and take the money out of your bank or credit union account. When it’s gone, that’s it. You’re done. Or, arm yourself with a DEBIT CARD, so that you cannot spend what you don’t have. (To be sure you are not depleting your household account, and can pay all necessary bills easily, carry a small notepad with you, and jot down each expense as you go along. Make sure you tally them up and reconcile expenditures with your bank account every day.) Credit Cards should not be an option. Leave them at home.
7. Stick to Your List
Be sure to carry your gift list with you so that you can track what you are spending and your budget stays right on target. Don’t forget – you’ve already established your spending limits. Don’t go over them. When you have purchased everything on your list, STOP SHOPPING.
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