With the Christmas holidays and all the great holiday sales over for another year, it’s now time to start thinking about all the spending you did and debt you created. Here are some tips to help you recover and not lose all your Christmas excitement.
Create a Spending Plan
· Start the year with a game plan or spending plan to manage your monthly bills and control unneeded debt.
· Put your expenditures into spending categories and manage toward the recommended percentages of debt to income – Giving (10 percent), Savings (5-10 percent), Debt (0-14 percent), Housing (25-38 percent), Insurance (5 percent), Auto/Transportation (12-15 percent), Personal Items(15-25 percent), Professional Services (5-10 percent), Entertainment (5-15 percent) and Small Cash Items (2-3 percent)
· Review your plan monthly or more often, if possible.
· Only spend money you have in your purse, pocket or bank account.
Control Your Credit Cards
· If you open new retail accounts to get a discount on shopping, be aware that this could cause your credit score to drop and these easy credit accounts normally have high interest rates.
· Pay off balances with the highest interest rates first. Don’t pay more in interest than you have to.
· If you can, pay more than the minimum each month, otherwise, interest will grow on the remainder of
your credit card balance.
Prepare for Next Year
Start a Christmas fund.
To avoid the stress of having enough money at the end of the year, start a year-round savings account specifically for holiday spending. Utilize payroll deduction to put away $20 or $30 every two weeks between now and the next holiday season. That’s almost $500 you can save towards the next holiday season.
Pay cash for gifts.
It’s harder to spend cash than it is to use a credit card — this could save you hundreds this holiday season, especially when using larger bills like $50’s or $100’s. It’s harder to break a $100 bill for something that only costs $5 compared to something that may cost $100 and is exactly what the recipient wanted.
–curtis a. wright, lutc-f
Curtis Wright has over 30 years financial services and insurance industry experience. He is the principal and owner of the Wright Financial Group LLC, an independently owned financial services firm.
For more information, please visit www.wrightfg.com.
