If your holiday budgeting didn't go exactly as planned, and now you're facing higher credit card balances, there is still time to reign in the spending and make things right. If you're not done with your shopping, take these tips to heart. It's early, and the New Year is the perfect opportunity to ward off a holiday hangover. (For related reading, take a look at What Exceeding Your Holiday Budget Really Costs.)
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- Count Your Blessings
With the barrage of post-holiday sales, special savings offers and New Years events, it's tempting to throw a few more purchases on the credit card in hopes of saving some cash on something you've always wanted. Many people find, however, that the holidays are the best time to abstain from much spending at all. By using moments with family and friends to remember how much they already have, it can be much easier to bypass the shopping malls altogether. Donate your gently used items to a charity, volunteer for a worthy cause and watch your savings add up!
- Prioritize Payments
When faced with the reality of all that you have spent on the season, it's best to lay everything out on the table. Get current copies of your credit card and bank statements, and take a serious look at what holiday will cost (both in principle and possible interest.) Then begin a systematic plan of paying everything back. You can choose to tackle payments based on interest rates (highest first) or balances. Some consumers do better when they knock a few of the more modest balances out of the way from the onset.
- Revisit the Budget
Many problems that spenders experience in their holiday budgeting occurs when they don't anticipate unforeseen expenses. By being proactive with your plan (starting in January for that year's holiday spending, for example), you can minimize the risk of having to play "catch up" with your resources in the final shopping hours. A simple allocation of $20 to $50 a month for twelve months can be the difference between making it or breaking it come next December. (For more budgeting tips, see Last-Minute Holiday Budgeting Tips.)
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- Plan for Yourself
Most shoppers spend the bulk of their pre-holiday dollars on their loved ones, but once January comes (and the sales are extra sweet), they tend to get more comfortable with buying something special for themselves. Instead of overspending, feeling guilty or depriving yourself of an affordable indulgence during the New Year blitz, why not plan for this inevitable opportunity? By setting a modest budget for any post-season urges, you are choosing to look at the realities of how you spend money and are looking forward to tackling it responsibly - without shame or remorse.
- Start an Emergency Fund
The holidays can be stressful enough without the added inconvenience of car troubles, an unexpected medical expense or an increase in the cost of living. Choose to do something about these facts of life before they strike, and you'll ensure that you won't be dipping into your holiday gift budget just to make it through a rough patch. Emergency funds can start out small (just $500 or so) and can grow to be a full- fledged safety net against the major burdens of unemployment, divorce or illness. By getting into the habit of saving for a rainy day, you can guarantee that next year's holiday can be an affordable one. (To learn more, read Build Yourself An Emergency Fund.)
- Don't Store More than You Can Afford
Gift wrap at 90% off is attractive, as is the thought of snagging flannel sheets for next winter. Going overboard on the Santa décor, however, is not only a risky way to spend your hard-earned dollars, but it can leave well-meaning shoppers with more loot than they can comfortably accommodate. If you must indulge in the spoils of the after-holiday sales, look for items that can serve a dual purpose. For example, red napkins work well for Valentine's Day and autumn parties, and chocolate candies can be baked into cookies or would fill a birthday piñata. Trickier items, like snowman bath towels and reindeer linens, will only be fitting for one month out of the year and may not be worth it.
The Bottom Line
Money skills take time to master, no matter the season. Take ownership of your choices (regardless of how poor they may be) and truly resolve to do better this year. Nursing a holiday hangover is never fun, but many important lessons can be learned as a result.
Find out what happened in financial news this week. Read Water Cooler Finance: Steady Stocks, Big G's And Madoff News.