The most wonderful time of the year to many people is quickly approaching. It seems to begin with Halloween and then just rolls like a snowball through Thanksgiving, Christmas, and New Years Eve. Then it seems like the weather starts getting warmer again. As rewarding as it is it can also be a very stressful time as along with the costumes, turkey, and mistletoe comes increased holiday spending, credit card interest rate, and tax preparation. In fact, 1.5% of the average US family annual income is spent on holiday expenses. So, we wanted to give you some tips on how to best prepare for the barrage of holiday spending and avoid some of the pitfalls.
First and foremost, it’s best if you can set and adhere to a holiday budget. Please notice the verbiage here, “if you can”, because I know how difficult it is when you stumble upon that one gift that is so perfect that you just have to get it. Or when you want the table to look absolutely perfect for Thanksgiving so you go spend a little bit more on the glasses than you normally would. It could be the Halloween costume that your son/daughter wants so much that you decide to go a little overboard on. The point is that if you try to set limits, even if you find that you go over, you will still enjoy all of the festivities but will be surprised that you have far less remorse when the bills or the bank statements with a depleted balance come in the mail shortly thereafter.
Speaking of credit card bills, this is the most predominant issue of the holiday season. By now everyone knows the pitfalls of high interest debt but it doesn’t stop most from falling into the trap. On the surface, it’s a great idea and rather harmless if you can pay the credit card balance when it comes due rather than the minimum payment and I think most have the intention of doing so but once again, the holiday expenses come up and before you know it the checking account balance is a little light. So, if you must carry some of the holiday cheer over to next month try to get a lower interest credit card to do so. Also consider one of the many balance transfer offers that many credit card companies offer as introductory incentives.
One of the newer traps that people fall into that often goes unnoticed is the Black Friday and Cyber Monday trap. At least at a mall time creates a barrier to the amount you can spend, the lines at the checkout are often longer than 15 minutes in duration, it takes a long time to find an item that you actually like or that you’re looking for, and you have to walk between stores. But online, especially on the two big sales days, and now there are 3 with Amazon Prime Day, you can literally spend you entire Christmas budget, and then some, in less than an hour. I’ll tell you, I was one of the last to convert, but I can say for myself, there is no better way to get your holiday shopping done than online. Not to be redundant, but if you have a list together you can save both time and money by doing it this way. The paradigm with this is that you don’t feel like you’ve really done anything when you’re all done and then end up doing more by the time you tally everything up. Possible solution is to do what you can to your list on line then as the days draw near take the annual trip to the shopping center. With all of the decorations and festivities it will really make it feel like it’s the season. If you have to pick up one last gift, it’s the perfect time to do it, and the pressure to spend will already be off. For our family this is part of the enjoyment for us. Grabbing random bites to eat, running into people we knew, and maybe finding something new we weren’t looking for.
At the end of the day the main idea is simply to enjoy the holiday season with your family and friends but part of that is doing it in the most financially responsible way so you have no regrets or financial hardship in the months following. Also, the afore mentioned concepts aren’t in any way “new data” you would be surprised how many of us fall into the same traps every year. So, before the craziness begins have your game plan ready, follow it as best you can, and let it snow!