12 Credit Tips for the 12 Days of Christmas
, by Rob Kaufman
No matter what holiday you celebrate, if you give gifts (or have parties... or travel, etc.) during this time of year, your budget is likely to take a hit. Unfortunately, it sometimes takes more of a hit than we plan and we end up paying for it, in many ways, the following year. We're going to try to take away some of the stress of overspending with some credit tips that might help you get through the holidays. Plus, if you do overspend, there are some actions you can take to make things a bit easier. We've added those into the mix of tips as well. Take a look...
Tip #1: Budget
Easier said than done, but plan ahead of time how much you can afford to spend and stick to that amount! Download a budget template or create a spreadsheet. Do what you must to develop and stay on the budget you set for yourself.
Tip #2: Make a list
And of course, check it twice. Surprise purchases tend to be a problem when trying to keep a budget on track. Find the easiest way for you to maintain a list and keep it handy at all times.
Tip #3: Always compare prices
Take some time to compare prices - whether comparing between brick-and-mortar stores or online stores. Based on the merchant and their inventory, the difference in price could be big.
Tip #4: Choose vendors carefully
When shopping online, be sure to shop with vendors that you trust the most - for price and service. You want to be confident that you're getting a reasonable price, and even if it's not the best price, that you'll be getting it delivered on time.
Tip #5: Pay cash
When possible, pay cash to avoid overspending on credit cards. By not spending too much on credit cards, you can also stay clear of high-interest rates on your credit card.
Tip #6: Save money
This credit tip goes in the middle because although you should have already saved for this year's holidays, make a note to start saving for next year. Starting in January, there are 12 months until the holidays. So why not make a budget, divide it by 12 and put that into holiday savings account each month?
Tip #7: Search for sales
Online or in store, there are always sales going on during holiday time (and before). Do some online shopping research and, as with tip #3, compare prices as you search for sales. You'll never know what you might find for less.
Tip #8: Caution: buy-now-pay-later
Many retailers offer ways to make a purchase now and pay for it later. Read the small print to make sure you're not penalized if you pay it back early or if you don't pay it back within the interest-free period. It could end up costing a lot more than you bargained for.
Tip #9: Track as you spend
If credit cards are necessary, check how much you've spent at the end of each day. Make sure to have a reminder of your maximum budget amount nearby, so you'll know how close you are to reaching the limit.
Now, if you've overspent your budget and find yourself in a bit of debt, check out these tips to help you along the way...
Tip #10: Know what you owe
Before the bills come in, try to document your spending. You can add up your purchase receipts or review your credit card purchases online. Remember to include purchases made on payment plans, deferred credit lines, and store credit. Knowing what you owe before the bills come in will help you get started early on the plan to rid yourself of debt.
Tip #11: Budget for January - March
Assess how much disposable cash you have every month to pay down credit card balances. Whatever is left after you subtract required expenses from income should go toward your holiday debt. Also, try to pay more than the minimum balance due. If you haven't paid off your debt after the first three months of the year, continue this strategy until the balance for your overspending reaches zero.
Tip #12: Talk with your accountant
Check with your accountant (or use a tax software program) to figure out if you might be getting a tax refund. If you are receiving one, perhaps you can allocate it toward your credit card balances. If you typically file your return electronically, you might actually receive your refund in February, which means you can start paying off your holiday debt even sooner!
See how other myFICO members have handled debt (holiday and non-holiday) at myFICO forum.