For many folks the post-holiday season hangover begins when credit card bills and bank statements start to hit our mailboxes in January. We realize that we have spent too much and over-extended ourselves. The next several months are spent trying to catch up and get our finances back on track. No one enjoys this feeling and it can be easily avoided by taking a few precautions.
First, have a plan for your holiday shopping this season. Start with a list of who you are buying gifts for and how much you plan on spending for each person. Second, create a budget to ensure you only spend what you have available for gifts. If you find that your budget is showing a shortfall try going back to your shopping list and possibly lowering the amount of money you were planning on spending on each person. Next, don’t forget about miscellaneous expenses that always come up during the holiday season. Holiday parties and social events may have you dishing out some extra cash that you normally don’t during other times of the year. Be sure to allocate some additional funds for these situations. Finally, avoid using credit whenever possible with one exception. We all know using credit cards can wreak havoc on our financial situations. I don’t need to belabor my argument any more than that; however, many folks use credit cards to accumulate “points” redeemable for airfare, hotel stays, cash, etc. If you are using your credit cards to make these purchases and then paying them off every month, this is a productive way to use credit. Conversely, if you are using the credit to make purchases that you can’t pull out of your cash flow you may need to rethink your strategy. This is a quick way to get yourself into a bad debt situation.
Hopefully these tips will help to ensure you stay on track towards your financial goals while enjoying the holiday season with family and friends.