Home » Headline, Personal Finance

3 Tips to Avoid Digging A Deeper Debt Profile After the Holidays

7 December 2017 No Comment

The holiday season is here and it is normal for people to start taking a more relaxed approach to life. After all, you’ve worked real hard in the first 11 months of this year. This is the time to relax, slowdown, and have fun – the rat race can begin in earnest again in January 2018. People tend to splurge during holiday season because you are expected to spoil yourself and buy stuff for family and friends.

However, if you are not careful, you could fall into the trap of spending more money that you can actually afford to spend on festivities. The worst part is that people tend to spend money with reckless abandon while forgetting the importance of setting money aside for essential bills. This article provides some insight on how to avoid the overspending trap so that you don’t get into a debt problem after the holidays.

  1. Create and use a holiday budget

You’ll find your attention drawn to many different things on which you can spend money this holiday season. You’ll find incredible deals and offers with 50% off, there’ll be some shiny new decorations in the store, and of course, there’s always new stuff to buy. Creating a holiday budget will help you to be in control of your holiday spending.

You should make a list of holiday expenses and prioritize them because you are not likely to have enough money to buy everything. Your highest priorities should include monthly mortgage payments and other debt repayments because it is not in your best interests to fall behind. You should determine how much should go towards each priority and pay the bills relating to debt payments as soon as you can.

  1. Remember that you’ll still pay bills in January

Many people tend to spend money with reckless abandon in December, and they usually forget that they’ll still have bills to pay in January.  It is easy to forget about utility bills, groceries, transportation, and other “mundane” bills when you are having a swell time with friends and family in December. The problem however is that many employers tend to pay their December salaries very early in the month, and you could end up blowing through your December salary before the month ends.

When January comes around, the post-paid bills for December and the pre-paid bills for January will show up at around the same time. Hence, you might find yourself in an unexpected rough spot financially when you don’t have money to pay the bills.

  1. Think twice before using your credit cards

Credit cards are a wonderful financial tool for buying stuff on credit and limiting the exposure of your banking details when you make online transactions. However, credit cards when not properly used could land you in a serious debt trouble. The Federal Reserve has said that Americans have racked up $747 billion in credit card debts, the highest consumer debt profile in the last six years. Unfortunately, many more people will add to their credit card debts during this holiday season.

Before you buy stuff with your credit card, you need to be sure that you have enough money to cover at least 80% of the purchase in your checking account. You should also keep a list of charges you make to your credit card so that you can know if you’ll still be able to pay back the monthly balance. More importantly, don’t spend the money you don’t have to buy the things you don’t need just to keep up with the Joneses.

Comments are closed.