The holiday season can be a wonderful time of year surrounded with the good cheer of family and friends. But when January rolls in, so do the post-holiday bills, and all of a sudden, your good cheer is fraught with the stress of credit card debt. So, how do you get out from under it?
The first step is to avoid holiday debt in the first place. At A.C. Waring & Associates Inc., we’ve put together some tips to help you spend wisely this season.
Plan a Budget for the Holiday Season
Generosity abounds during the holidays, but do you really need to buy gifts for acquaintances as well as friends and family? Plan who you will be buying for and set a budget for each person well in advance. If you spend on your credit card, avoid making lavish purchases or going over your holiday budget unless you’re certain that you will have the funds to pay it off the following month.
Use Cash instead of Spending on Credit Cards
Avoid revved-up spending during the holidays by leaving your credit card at home. Don’t take it with you when you go shopping. Use only your surplus income to make cash purchases, and when the money runs out – stop spending. Even better, start saving earlier in the year. Allocate a certain amount of money from each paycheque to go into a savings account. By tucking away just $50 a month from January to December, you will have accumulated $600 in cash for the holidays.
Consider Other Holiday Expenses
Holiday spending is often more than just gift-giving. Plan ahead for those extra expenditures, such as hotel stays, eating out, entertaining, and so on. Make sure all of your necessities are paid first, such as bills and groceries. Then pay for those little holiday extras with your surplus income. Pay in cash whenever possible, so you don’t accidentally blow your budget. If you don’t have the cash, avoid the temptation to put it on your credit card. If you must, make a commitment to pay it off the next month.
When Holiday Spending Goes Overboard
Carrying a balance on a high-interest credit card means that you also have to contend with accrued interest. If you overspend on a high-interest card and you don’t have the funds to clear it the next month, you could end up paying twice the amount you intended on your holiday purchases.
This can cause a snowball effect that could become nearly impossible to get out of without help. To get things back on track, consider consolidating the credit card balance onto a low-interest line of credit instead.
Contact Us for Credit Counselling
A.C. Waring & Associates Inc. is Edmonton’s clear choice in credit counselling. We will help you develop a plan to get out of your credit card debt and back onto a positive financial path. Call us at 1-800-463-3328 or 780-424-9944, or send us a message to book a free consultation today. We’re ready to help!