It’s Beginning to Look a Lot Like December

I know what you’re thinking, it’s the holidays and it’s a time for giving. Sadly, this mentality is a key contributor to overwhelming debt in too many people. Gifts, decorations, parties, wardrobes, and groceries are a few of the expenses that somehow sneak up on people every year. Not considering how expensive the month of December can be usually results in people going deep into debt so they can do everything they want to at this time of year.
Since there is nothing less festive than the pressures of debt, here are some steps to help you this year, and every year.

Start Saving Early: Regardless if it is February or October, the holidays are coming this year the same as they did last year. And like any large expense, be it a vacation, home renovations, whatever, if you know what’s on the horizon there is no reason why you shouldn’t be doing your best to save money for it.
The simplest solution is to shave a small bit off of each paycheck, and put it into a savings account. In the grand scheme of things, a few dollars here and there can result in a nice cushion when you start shopping in December. Only $20 per pay check will result in over $500 per year. The key is to plan ahead and start early. After a few weeks, you won’t even notice it leaving your bank account. Make sure it is an amount you can afford, and if you’re having trouble finding it, think of some changes you can make per day, week, or month in order to save. You’ll thank yourself later when you can afford everything you need to over the holidays without going into debt.

Start shopping early: The key to a financially successful holiday season is to avoid squeezing all of your purchases into one month. You’ll be less likely go into debt from over-spending if you divide your purchases up in the few months before the holiday season.
By now you should know what to expect from the holidays, and have the foresight to plan ahead. If there is an outfit you want for a work party, buy it in July. Keep your eyes peeled for sales and buy gifts months in advance. By keeping a list of everything you have planned, and everything you purchase, you’ll avoid buying too much and likely stick to your budget. The point is, the holiday season isn’t some financial problem that is suddenly sprung on you. You know what’s coming, so you can prepare.

Only buy gifts you can afford: If you can only afford to save $20 per pay check to spend on presents, spending $600 on a gift is not a good idea. Everyone loves that feeling of giving the perfect gift, but if it is going to set you back, just avoid it. Instead, write down everyone you want to send gifts to this year, break down your savings and assign an amount to each present. Be diligent and try your best not to spend more than you’ve planned. At the very least, this should keep you close to what you want to spend, or even keep you away from the higher priced items you’ve already determined you can’t splurge on this year.

Avoid Credit Cards unless you can pay them off the month you use them: avoiding debt during the holidays takes discipline. There’s going to be gifts, high grocery bills, unexpected expenses, plus all of your regular monthly bills. December can easily be one of the most expensive months of the year. If you’re going to enter the New Year without added debt, it’s smart to avoid using your credit card at all.
Credit cards give people a false sense of additional income. When using a credit card, for a short period of time you feel like you can manage. It isn’t long until that feeling of control is replaced by the pressure of heavy debt and high interest costs.
Treat your credit card the same in December the way you should year round. Only use your card for expenses you have the money to pay off, or at least will have in the near future. If you’re able to take advantage of rewards and points, definitely take advantage. Better yet, use those points to help make purchases over the holidays and save you even more.
Are you still paying off your holiday bill from last December? Perhaps it’s time to seek professional counselling. The team at Rita Anderson and Associates will not only help you climb out of your current situation, we’ll ensure you create great habits that keep you out of these situations in the future.