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Holiday Debt Management

As the end of 2013 approaches, with the holiday season is in full swing, it is important to manage your finances to avoid the January “debt blues”.  While sharing the joy of the season is admirable, you will not be sharing the debt burden, so economizing and budgeting are important.  A few things to consider:

–          Save your receipts!  You do not want to be stuck with an unwanted or ill-fitting gift, and still have to pay for the charge on your credit card bill.

–          Be careful with your debit card.  Remember that debit cards do not have the same protections afforded by credit cards.  Prompt notice to your bank of a lost or stolen card is essential to prevent your liability on any unauthorized purchases.

–          Be careful with your credit card when shopping online.  Do not enter your credit card data on any website that is not secure and encrypted.

–          Use cash for smaller purchases.  It is old-fashioned, but it will help you stick to a budget when purchasing multiple small gifts.  As a friend of mine used to say, “when your wallet is empty, you are done shopping.”

–          Don’t forget the essentials, such as mortgage and car payments.  It is easy to take advantage of the grace period on your secured debt payments in order to accommodate holiday spending.  However, this can put you perilously close to default in the event that an unexpected problem should arise later on.  My suggestion is to make the January house and car payments in advance (October or November) so you know exactly how much you can afford for the holidays.

–          Don’t bank on your income tax refund to be a debt bailout.  Otherwise, any delay in the processing of your refund could jeopardize your ability to pay the holiday credit card expenses when they come due.  A default on credit card payments will result in an escalation of interest rates, further compounding the problem.

–          Be careful when you travel, and minimize the personal data and information that you take with you.  There is no need to take any non-essential credit cards.  The more credit cards you take with you, the more work you will have ahead of you if your purse/wallet is lost or stolen.

–          Review your credit card statements for any unauthorized or duplicate charges, especially if you made any online purchases.

Be wise in your spending and remember the “reason for the season”.  Many times a simple hand-made gift, visit, or just a sincere phone call to let someone know that you are thinking of them will be better received and longer remembered than a store bought purchase.  Merry Christmas and Happy Holidays!