How to Avoid the Post-Holiday Financial Blues

Are you financially prepared for the Holiday Shopping Season? Will you be making your purchases with cash or credit? Do you have a planned amount of money you will be spending on gifts? If you owe $5,000 of more on your credit card or know someone who does, who only pays the minimum payment each month, you are not alone. The levels of consumer debt are increasing rapidly around the world. A Debt is Not Just for Christmas Christmas is the time of year when many consumers fall into the trap of spending too much money on expensive Christmas gifts. Most of these purchases are made on credit cards rather than using cash. This means these consumers often end up with large credit card debt in the New Year. The New Year is also the time when bills for other expenses, such as holidays, school fees and taxes come due. Credit cards are an expensive convenient source of money and many people don't realize just how expensive they can be. Remember gifts purchased on your credit card that you will not be paying in full, will become a debt. This debt will be with you long after Christmas is gone. The most damaging part of this process is the interest you pay on your holiday purchases over time will be more than the cost of the gift. This interest payment you are making will also become someone else's investment return. Tips to Avoid the Post-Holiday Credit Card Blues 1. Make a budget for Christmas spending - add 20% to the amount and stick to that number. 2. Write a list of everyone you plan to buy presents for and the amount of money you can afford to spend on each person's gift. 3. Pay for presents using cash or lay-away rather than credit cards - if you have to use credit cards use only one. 4. Use a card with the lowest interest rate and credit only what you are able to pay off in one payment or within three months. 5. Give yourself time to shop - avoid last minute impulse buying of whatever you can get your hands on. 6. Write down everything you buy for the seasons, food, decorations, cards etc, and their cost - keep a running total. 7. Consider opening a Christmas Savings Account, so that you will be better prepared next year - for $10 per week, you will be over $500 ahead of the game next Christmas. 8. Gather all of your bills and obligations in one place and write down what you owe, to whom and at what interest rate - Now! Be complete and honest with yourself. Get a Jump Start on Holiday Planning for Next Year - Invest in Yourself! Make a present to yourself this Holiday Season by investing in yourself - eliminate your debts and start your wealth creation plan. 1. Take any "downtime" during the holidays to make a list of your financial goals for the next year, two years after that, then five years and longer. 2. Add up household expense budget for this year and add 5% to that amount. Start a monthly program to set aside 10% of the amount for the next 10 months starting in February of 2005. 3. Read a self-improvement book such as "The Automatic Millionaire" by David Bach. 4. For some people depression comes with the holidays - tame the depression with the knowledge that you can make 2006 a more fulfilling and enjoyable year financially. 5. Take time to assess how financially secured you are - review your insurance needs, emergency fund, wills and overall debt and wealth balance. Real Worth Remember your Real Worth is not only measured by the material gifts you give.This Holy Season is a profound and powerful timeto commit yourself to new beginnings, to startnew practices and to choose what you want yourfinancial life to be in the coming year. Very few people choose financial clarity as one of their new practices. Plan for your expression of love not only through gift giving to others, but also a gift to yourself for a secured Financial Future. Make a painless New Year's resolution that will give you the "Holiday Feeling Financially" for many years. Copyright 2005 Joan Peterkin. All rights reserved.