Tis the Season …To Run Up Credit Card Debt! The influx of tantalizing gift catalogs and those department store charge card specials have reminded me that it is that time of year again…when the excitement of the holidays and shopping for gifts can lead many to over-spend and fall further into credit card debt.
Here are a few tips to help you have a joyous holiday that won’t leave you saying “Bah, humbug!” when you get the bills in the new year.
Keep Things in Perspective – The stores and the credit card companies have brainwashed consumers into believing that in the spirit of gift-giving, the holidays are a time to pull out all the stops. It is okay to spend more at Christmas than we can afford; just charge it! Don’t worry…it’s just money! Christmas only comes once a year, right? But the reality is, if you can’t pay off the bill, you could end up paying on that holiday sweater for a year or more, depending on the interest rate of the card, any late fees, over the limit fees, etc. Where once we only thought of financing our cars, homes, and maybe college, we have now been lured by the credit card industry to finance everything! Their expectation is that in charging everything (on those “great” cash-back rewards cards), you won’t be able to pay the bill and they will make all that interest on you.
Set a Budget - Set a budget for what you can comfortably afford to spend and stick to it. Your goal should be to spend no more than what you can pay off, in total, when the monthly credit card bill comes due. Don’t finance your Christmas. Some people very wisely set up a separate Christmas fund account, setting aside money throughout the year to use for gift-buying, holiday entertaining, travel, etc. This is a good way to keep from overspending. These proactive consumers purchase their holiday cheer with their savings – money they can afford to spend. Don’t have a Christmas fund account?
It’s not too late to sit down and plan your holiday shopping within your spending means. 1) Determine what you can afford to spend, 2) Set your budget, 3) Sit the family down and get everyone to commit to sticking to the budget, 4) Set spending limits for each person on your list, and 5) Keep close tabs on your expenditures. You’ll have a merrier Christmas if you aren’t stressed over how you are going to pay the bills!
If You Charge It, Add Up Your Receipts As You Go – In my younger years, with only a checking account for non-cash purchases, I tracked my expenditures by entering the check amount in the register as I wrote each check. Thus, I always knew exactly how much I had spent against how much I had available to spend. Now with credit cards, when the bill comes, it is often shocking at how quickly that credit card balance added up. If you must charge, the best way to ensure that you are staying within your financial means is to set your limit, then add up your charge card receipts as you go.
Don’t Open Any New Credit Card Accounts – The holidays is an especially good time for the credit card companies and the stores who represent them to ensnare new debtors by offering special discounts. Don’t sign up! The interest you pay will far outweigh any savings you may get and that extra card could negatively impact your other credit card rates. Receiving a 10% discount on your purchases for a day by simply signing up for a new charge card is of little advantage if you can’t pay off the balance in a month. When you spend more than you can pay off and end up carrying a balance at an APR of 21% or more, you will now pay more than the original price for the item instead of getting it at a discount.
In addition, that extra credit card could impact your credit score. The more cards you possess, the lower your credit score. Your lower score can, in turn, cause any of your other creditors to decide that you may be a risk and thus, raise your rates on your other cards. If you must charge, then stick with the cards you already possess.
Are You Already in Credit Card Trouble?
Start Your New Year’s Resolution Now To Get DEBT FREE!
If you have credit card debt over $5,000, are struggling to make the minimum payments each month, take out new cards to help pay off old card balances, or seriously thought you might need to file for bankruptcy, you may qualify for Debt Settlement. You can obtain a free debt consultation from Credit Card Relief™ by clicking here. They can help you determine the best solution for getting you free of debt. For more information, read my blog dated September 29, 2006.
