Digging Out After the Holidays
Digging Out After the Holidays
The winter holiday season can put a pretty heavy strain on your finances. But, rest assured that there are ways to stay afloat financially.
According to a press release from the National Retail Federation, the average person will spend around $805.65 extra during the holidays. In a two-person household, that can be more than a monthly mortgage payment.
So, how do you corral your spending and deal with the aftermath? Here is a list of a few things that you can do in the coming months to keep your finances stable.
1. Develop a Reasonable Budget and Stick to it
The word “budget” can be a bummer. An even bigger disappointment is seeing a large credit card bill at the end of the month. By carefully planning out your spending ahead of time, you should be able to cover all of your regular expenditures without having to rely on your credit cards to pick up the slack.
Try using the payment calculators that most credit card providers post on their sites. Or, use a private company like CreditKarma.com. This will help you plan the rest of your budget and quickly pay down your post-holiday debt.
2. Don’t be Tempted by Post-Holiday Sales
It is tempting to ignore your budget when the post-holiday sales roll around. There’s a good chance that many items that you’d still love to have will be heavily discounted. When temptation hits, try to be mindful of your debt-reduction goals.
3. Pay Off Grace Period Purchases First
Many retailers and credit card providers will lure you in by offering special rates and grace periods in exchange for spending a certain amount. This can be detrimental to your saving goals. If you still carry a balance at the end of the promotional period, you will most likely be hit with the full interest amount.
4. Be Aware of How Much You Spend on Food
According to a 2015 survey conducted by VISA, the average American spends $53 a week going out to lunch. That is over $200 a month! The same goes for your morning coffee. Americans spend close to $800 a year purchasing a quick and convenient cup of joe. This amounts to over $3000 that you could be putting towards paying down debt.
4. Avoid Costly Activities
It’s incredibly easy to get caught up in frivolous spending at bars, restaurants and other entertainment venues. Thankfully, many free or reduced-cost activities are available in communities across the country during the holiday season. Be sure to check the local paper or your town’s website for current offerings.
5. Claim Your Tax Return ASAP
You may not realize this, but your tax return is an interest-free loan to the government. This is money that you could be putting toward your interest-bearing debt.
6. Get Your Health Exams Before the New Year
If you’ve met your deductible for the current year, you can save a huge amount of money by getting your routine medical, vision and dental exams out of the way before the first of the year. Most insurance companies start their fiscal year on the 1st of January, meaning you’re back at square one as soon as the clock strikes midnight on New Year’s Eve. You can even get insurance for dental care and save too.
7. Give Yourself an Allowance
If you’re not able to buy the occasional magazine or pair of boots, you are more likely to splurge at a later time. Create a feasible “allowance” for yourself each month.
8. Plan Ahead for Next Year
If the thought of not having a big holiday with tons of gifts makes you blue, you can take action to make it easier on you and your family next year. It’s never too early to start planning. Troy Martin of Cook Martin Poulson P.C in Utah recommends using a planning worksheet such as the one offered by bankrate.com to determine how much money you will need to spend on the holidays next year. This will allow you to plan ahead, and ensures that you won’t fall into the debt trap again.
Don’t let the stresses of holiday-related expenses ruin the season. To start, take a look at the online resources mentioned in this article. Then, prepare your budget, set realistic repayment goals and be sure to follow them.
There is really no time like the ‘present’ to get started. It will surely make your holidays a whole lot more enjoyable!