How To Control Your Spending During The Holidays
A Guide to Budget Your Shopping and Manage Your Credit Card Debt
When the holidays are near, they bring a lot of excitement. Your calendar gets filled up with friendly celebrations and family gatherings with lots of decorations to put out, food to share and gifts to give. Malls are packed and stores are fully stocked for plentiful shopping for all. The season for giving can be fun and heartwarming, however the repercussions of such lavish spending can also have a negative impact on your finances.
Most people don’t prepare well financially for the holiday expenditure and typically tend to use their high interest credit cards; the pay now and deal with it later option. If you don’t plan ahead for the extra spending that will take place toward the end of the year, just before the holidays, you will start the New Year with higher monthly payments on your credit card bills that you may not be able to afford.
So how do you break free from this neverending yearly cycle?
You can learn how to control your spending by creating a plan ahead of time. Budgeting your holiday shopping along with managing your finances throughout the year will alleviate the hardship that may follow after the season is over.
A credit card is simply credit that is given to you without collateral. Which means that if you cannot or do not pay on time, you run the risk of negatively impacting your credit score as well as paying high late fees for unpaid bills. And of course with high interest rates you will end up paying up to three times the amount you borrowed.
When there is no collateral behind a credit given, lenders can sue a borrower for an unpaid balance and some will even resort to garnishment. These are the types of things you want to avoid by making better choices during the holiday season. There are many ways to prevent these things from happening, however you have to be diligent in your planning.
Some of the steps you can take now to financially plan for the next year are:
- Know what you are spending. Look back at your spending habits from the previous years in the months of November and December. One way is to calculate all of your receipts, and another is to go back into your credit card history to get the monthly spending average. This way you can have a better idea of the average amount that you would typically spend during these times.
- Compare your spending average with your income. Now that you have an idea of your expenditures, understanding what you can and cannot afford is key to finding a budget and staying within your spending parameters.
- Create a budget for holiday spending. Take your average spending amounts from the previous years and assess your monthly credit card payments that followed. Were they affordable? If they were not, then you know that you need to make your budget lower than what you previously spent. This will help you to foresee what you can afford, as well as what your monthly credit card payments will be.
- Create a holiday savings plan. If you know what your previous spending average is, and if you have created a new affordable budget, you can then start to put some money aside for the next year. For example, if you spent $2000.00 last year all on your credit cards and your monthly payments were too high, but you still need to stay within the same budget overall, a good option would be to cut the credit card spending in half and save some cash for the other half. So if you needed to save an extra $1000.00 in cash over the next ten months up until November, you would need to put aside $100 every month into a safe place or a savings account.
- Keep your priorities in line. If you are able to save more cash and do not need to use your credit cards at the end of the year, of course this would be the best option. You would then have to double your cash savings amount.
By following these guidelines you can finally manage your finances better and not end up going through hardship as a result of just wanting to experience a wonderful holiday. We all want to be generous with our gifts and provide a warm decorated home filled with delicious things to eat and drink, but at what cost to you in the aftermath.
When it comes to any debt scenario and learning more about how to manage your finances, it is always a great idea to educate yourself more in Financial Literacy.
If you are already suffering the consequences of overspending this year or maybe still from the previous years, and your credit card bills are sky high and no longer affordable, there are also options for you to clear this debt and to start fresh.
The best two options for clearing your debt are as follows.
- Credit Card Debt Consolidation. This is when all of your credit card balances are combined into one new loan, with a possible lower interest rate and one lower monthly payment. This can be a beneficial option if you have more than one credit card and if you are still currently making payments for each one on time. Keep in mind that this option does require you to get a larger lump-sum loan to be able to combine all of your credit card debts.
- Credit Card Debt Settlement, This is when you have outstanding balances or the account is in collections. The monthly payments are no longer affordable for you and your account drafts may be resulting in insufficient funds. Debt Settlement is the best option for this situation. Firstly, so that your lenders can immediately stop drafting your account and collectors can stop harassing you. Secondly so that you can now work to find a lower and more comfortable combined monthly payment. Once you have enough funds saved up you can then settle your debts.
For more information on Debt Settlement read: Helpful Tips About Credit Card Debt: The Top 3 Reasons Why Credit Card Debt Settlement Is The Best Choice
A strong recommendation would be to work with a professional Debt Settlement Company like Encompass Recovery Group. Working with a debt relief specialist will take out the guesswork and time you will need to put in to make sure that everything goes smoothly.
Lenders and collection agencies can be brutal and may not want to work with you. If you do not have legal representation or knowledge on how the process works, it can be a long and grueling process to go at it alone. A company like Encompass Recovery Group has the tools, experience and knowledge you need to be able to finally free yourself from the burden of debt.
The holidays are meant to spend time with friends and family, not to end up in more debt. They are also not meant to feel stressed and overwhelmed by spending money that you cannot afford to pay back.
Take control over your finances by budgeting your shopping and managing your credit card debt. Start the New Year off right by handling your outstanding debt today, and start fresh for the next holiday season to come.
Learn more about your options and call today to get qualified for our Debt Settlement program.