As a Daily Money Manager, I’d be remiss if I didn’t talk about credit card debt and personal finance management during the holiday season. With the flurry of sales and other Black Friday specials, it can be all too easy to get caught up in a holiday spending spree.
If you want to avoid a New Year’s financial hangover, where you pay the piper when those credit card bills start arriving, here are a few tips to keep a level head this holiday season.
1. Know Your Limits
And I don’t mean know your credit limits! According to USA Today, shoppers last year racked up more than $852 billion in debt in December alone.
Did you know that your credit rating can suffer if you have used up 50% or more of your available credit? I advise my clients to establish a comfortable spending limit. It’s one thing to defer payment using credit, it’s another to not be able to meet your monthly obligations. If you pay just the minimum credit card payments, those yule-tide celebrations will linger well into next year. Going beyond your limits can sap your resources and hamper your personal financial management goals in 2013.
2. Extending Warranties thru Credit
Many electronics have a limited one-year warranty. Some credit cards can extend that warranty, and provide added protection if items don’t work as promised. Check your credit card fineprint about coverage and how to access it.
3. Be Aware of Return Policies
Many stores have a 30-day no-questions-asked return policy if the item is unused or unopened. However, some retailers curtail it during the holidays. So if you’re not sure if Cousin Nelly will like that sequined Rudolf sweater complete with the battery-operated flashing red nose, ask the clerk what the return policy is for holiday items. Also, ask yourself what your time is worth when you have to stand in long lines returning or exchanging items before making impulse buys.
4. Comparison Shop Items on Your List
Making a list and checking it twice before heading to the mall is always a good idea. Doing some online comparison shopping is even a better idea. On your gift giving list, jot down some ideas and your price limit. Then check out the your favorite stores online to see what kind of deals they have. If you’re on their mailing list, you may even get special coupons you can redeem and reduce your holiday bill even further.
5. Be Creative
The holidays should be more than exchanging schwag with your friends and family. It’s a time to get together and enjoy each other’s company. What no- or low-cost activities could you do instead of exchanging expensive gifts? Maybe a holiday tea or lunch is a nice respite from the holiday craziness.
One year a girlfriend hosted a “bauble exchange” where we brought costume jewelry and other accessories in good or excellent condition and laid everything out anonymously. We all were free to pick and choose from some pretty amazing things. And the best part was that it was all free!
For large families or gatherings, picking one name and splurging on one thoughtful item is preferable to lots of items where they are returned or unused. Of course, there’s always regifting 😉
What other ways have you maintained your personal financial management goals at the end of the year?
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