The economy has improved greatly in the last year after Covid upended our normal way of life. Growing consumer confidence and higher wages are fueling the surge. Unfortunately, supply chain issues are reducing inventory, which means that goods will be more expensive than they have been in the past. As a result, holiday shopping will be more expensive, not just for gifts, but everyday household goods. Consumers who do the majority of their shopping on credit have to be especially careful if they have traditionally relied on income tax refunds to pay for their holiday spending, as individuals who have received monthly ACTC (Advanced Child Tax Credit) payments throughout the year will receive much smaller refunds come tax time.  PRIORITIZING DEBT REPAYMENT WITH YOUR INCOME TAX REFUND  These tips should help you to avoid overextending yourself during the holidays, so that you are not paying yourself out from under holiday debt for the majority of 2022.

Set a gift budget – This is especially important if you have a spouse, as coordination of holiday spending between the two of you will be essential. Decide in advance how much you are going to spend for gifts and keep a running total of gifts that are purchased and the amounts. Save your receipts so that you can track your spending, in addition to having them available for any items that need to be returned or exchanged. Start your buying with family and friends that are closest to you, and then shop for extended family, acquaintances and coworkers later. Once you start to approach your gift spending limit, be prepared to make hard decisions about what you can purchase and who it is for. Try to think of alternative gifts that do not require spending money, such as offering babysitting or pet sitting services.

Set a budget for travel plans – Many people will travel to be with family and friends, adding additional strain to their year-end budget. This means that your holiday spending will be even more restricted than those who do not have to travel, as you are also incurring travel costs. Make sure that you have set aside enough money to finance travel before you embark on your gift purchases.

Establish an emergency savings holiday fund – Even if you have appropriately budgeted for gift-giving and travel, you still need to maintain adequate funds on reserve in the event of an emergency, such as car repairs or unexpected medical expenses. FIVE EASY WAYS TO WEATHER FINANCIAL PITFALLS  Avoid putting these expenses on credit cards if at all possible, because emergency spending does not give you the opportunity to price shop or defer an expensive purchase until you are more financially secure.

Avoid making any big-budget purchases – Unless required by necessity, financing the purchase of a house, car, or significant household improvement such as a swimming pool should be deferred until after the holidays. While prudent saving and careful spending can minimize the post-holiday financial blues, long-term vehicle or mortgage payments acquired during the holidays may be difficult to balance in addition to holiday debt.  TEN MISTAKES FINANCIALLY STABLE CONSUMERS MAKE WHICH CAN LEAD TO BANKRUPTCY

If money is short after the holidays, prioritize your debt payments – Emphasize making the payments on the things that are most important, such as house payments, vehicle payments, rent and utilities. Don’t make the mistake of maintaining credit cards or other unsecured debt at the expense of housing and transportation.  MANAGING CREDIT CARD DEBT AFTER THE HOLIDAYS: HOW TO PREVENT A BAD SITUATION FROM GETTING WORSE

In conclusion, careful budgeting, careful saving, and careful spending can prevent the post – holiday financial blues. But even the most careful consumer can fall victim to a catastrophic financial event such as health problems or unemployment which will make debt management difficult if not impossible. If you find yourself in that predicament, you may wish to consult a bankruptcy attorney so that you can maintain your debt priorities and protect yourself and your family to the full extent possible.