How to Avoid Overspending this Holiday Season

Christmas is just a little over two weeks away and if you celebrate by giving gifts it's easy to overspend or rack up your credit card debts if you don't pay attention to your budget. Staying on budget during the holidays requires thinking about what really matters to you.

If you tend to overspend, here are a few quick tips that can help you cut your spending and still allow you to enjoy the season.

1.  Make a list and check it twice

If you haven't already, list the friends and family members with whom you usually exchange gifts.  Then decide if there is  any one you can remove from your list.

2. Set a budget

One you're satisfied with who's on your list, set a budget fro each person or gift.  Pick a dollar value you are comfortable with.  Keep that dollar value in mind but also search for sales that can bring you under budget.

3. Make your own gifts

If you are the creative type, use your talents to lighten the strains on your wallet. For instance, you can create gift baskets with homemade goods, like chocolate chip cookies for a reasonable price. You could also invite friends over for a homemade meal.  It doesn't have to be a fancy dinner, make it a pot luck, or get together for desserts or brunch.  

When it comes to holiday cards, doing it your self can pay off.  Consider sending a letter on brightly colored paper.  If you prefer store bought cards, plan ahead for next year. Stores cut prices as the holidays get closer or after the holidays.

4.  Give from the heart

Some family members or friends may appreciate your time more than an expensive gadget. Rather than a new fancy coffee maker, you can take a friend to the movies or volunteer to run an errand for an elderly family member.

5.  Don't use credit

Pay cash.  Wherever possible, pay for everything by cash instead of credit card.  This will help you avoid all the fees and interest that are charged to your card- and avoid the surprise of finding out you actually spent more than you should when the credit card statement arrives in January.

Sticking to a budget isn't easy, to ensure your success, always bring a copy of your budgeted list with you when you go shopping. When you're done shopping- go home so you don't give in to impulse buys.

Leave a comment and share how you avoid overspending during the Christmas season.

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Posted in: debt management , Overspending , Shopaholic

What's the Right Order to Payoff your Debt?

Debt Elimination Plan 

So you have acquired some debt and you want to create a plan to pay it off.  There are a number of ways you can choose to go about paying off your debt. I think the most financially prudent way to attack multiple debts with different interest rates is to attack the highest interest rate debt first.  It's even more helpful if you can rearrange your budget to free up some cash to throw at your plan.  As each debt is eliminated, you take it's former payment and add it to the next highest interest balance.  You just keep doing this until all your debt is gone.

Another method, which is endorsed by radio talk show host Dave Ramsey is the "Debt Snowball method", this is where you payoff the smallest balances first. Using this method you see your debt eliminated faster, which could help keep you motivated.  In this method the interest rate is not a concern, Dave advises that if you have two debts with the same balance, then payoff the higher balance first.  The idea of the snowball is simple: pay minimum payments on all of your debts except for the smallest one. Then, attack that one with gazelle intensity! Every extra dollar you can get your hands on should be thrown at that smallest debt until it is gone. Then, you attack the second one. Every time you pay a debt off, you add its old minimum payment to your next debt payments. So, as the snowball rolls over, it picks up more snow. Get it?
  
Emergency Fund is Key

One of the biggest key to keep from adding more debt in the future (in addition to making smarter choices as it relates to incurring more), is to have cash in the bank.  This way, when the unexpected happens you'll have cash to pay for it rather than needing to revert to credit.  Most financial professionals recommend having an emergency fund of 3-6 months' worth of your monthly expenses, but when you have a lot of debt, a smaller goal of $1000 can be a great place to start.

Whatever method you choose to eliminate your debt, the key is to remain consistent, stay focused  and stick to your financial goals. In a very short time you will create unbelievable and unstoppable momentum.

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Posted in: credit card debt , debt management , debt snowball