Create a Plan Now to Avoid the Holiday Bills Blues Later

It’s only fall, so why should you be thinking about the winter holidays now? Consider this worrisome statistic from online payment site ebillme.com—more than 60 percent of survey respondents were still paying off their 2009 holiday bills in March 2010.  But by planning ahead, you can build a manageable holiday spending plan and avoid building up hard-to-pay-off credit card debt. 

Start sooner, not later

The first step is to make a holiday spending budget now. First, pull out last year’s credit card and bank statements to get a realistic picture of what you spent and where you could cut costs this year. Make a list of everyone you need a gift for, including family, teachers, co-workers, and friends. 

Next, figure out your additional holiday expenses. Include:

• Food and drink for family, work, and school celebrations
• Travel expenses for holiday visits
• Holiday cards and postage, decorations, wrapping paper and gift wrapping supplies
• Any holiday outfits for you and your immediate family
• Charitable contributions you plan to make

If you need help creating a holiday budget, you can find budget worksheets and calculators online. To keep yourself on track, you can also keep a log of what you buy and how much you spend.

Put a little away every pay

The best way to avoid a mountain of post-holiday debt is to pay cash or use your debit card for your purchases. You can build a holiday fund by putting away a portion of each paycheck between now and the holidays. You can also add to your holiday fund by making little changes in your day-to-day spending, like skipping your morning latte or bringing a bottle of soda or water from home rather than paying up to $1.50 for it from a vending machine. 

Consider keeping it small

If you have a large extended family or lots of co-workers who exchange holiday gifts, consider suggesting limiting gifts or spending per gift. You could, for example, agree with your siblings to draw names for “present partners” who will exchange gifts with each other. At work, you could suggest a cookie or baked goods exchange instead of store-bought gifts. Even if you can’t cook, a few cookies from the bakery cost less than a CD or a book. There are lots of great present ideas out there that don’t cost a lot of money.

Don’t leave home without a list (and stick to it!)

Without a list, holiday shopping can snowball. You’re not sure what you want, walk into a store and just keep adding items to your cart. Before you leave home, make a list of all the gifts and other items you need. It’s smart to have back-up items on your list that are within your budget in case you can’t find that super-popular video game your child asked for, or the sweater you wanted to get for mom. Check sale circulars, coupons, and internet sites to pinpoint the best deals before your shopping trip.

Start shopping before the rush

While most people wait to start their holiday shopping until after Thanksgiving, you can often find great deals long before the high-pressure shopping nightmare known as Black Friday. If there are particular stores where you plan to shop, sign up for their email sale alerts and special coupons. If you’ll be shopping online, look for sites that offer free shipping. Last minute shopping is the biggest budget buster because you feel pressure to get a gift (any gift!), regardless of price and your budget limits.

Book travel early to save money

A one-day advance ticket from New York to Cleveland can cost up to $283. The same flight booked three weeks in advance online can cost just $130, so it makes good sense to book your flights, train tickets, car rentals, and hotels as early as you can. Do be careful about non-refundable reservations if there’s any chance your plans will change.

What if you slip up?

If you do find yourself with more debt than you can manage after the holidays, the best plan is to start working to prioritize it and pay it down right away. You can turn to non-profit credit counseling services or work with a reputable debt relief organization such as CareOne for help figuring out a plan that works best for your personal situation. A CareOne certified credit counselor can help you understand your options for getting out of debt, providing you with information on debt management plans as well as debt settlement plans.

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