Having debt problems do not have to put a damper on your holiday season. As most of us know, having debt can really hinder us from enjoying life to the fullest. That is how powerful it really is. If you let your credit balance get higher, you are giving debt more power over your life. The higher the debt, the higher the possibility that it can ruin your financial life. It can hinder you from enjoying the finer things in life.
Take for instance the current student loan problem. It is believed that this is the reason why a lot of people are unable to buy a new home. A lot of young adults cannot even move out of their parents’ home. They are also unable to buy a new car. There are so many things that they cannot do and that is because of their debt problems.
Since getting out of debt is something that does not happen overnight, you know that you need to go through the necessary sacrifices for a long time. So if you have some debt problems right now, it is possible that you will be going through the holiday season with a balance.
According to the study done by the National Retail Federation, the 2014 holiday spending has the highest level – at least since 2011. The report published on NRF.com, here was a reported 4.6% increase in the sales during the 2014 holidays. Apparently, this was in line with the forecasted growth of the group – which was 4.1% earlier that year.
This year, it is believed that consumers will continue to spend this holiday – despite their lingering debt problems. If you are one of those who want to enjoy this season but you have a lot of debt to think about, do not worry. There are tips that you can follow that will help you enjoy the holidays and keep your debt woes from ruining it.
How to keep your credit situation from destroying your holidays
While your debt situation may put a damper on your holiday spirit, do not let it completely ruin your celebration. You can enjoy the holidays even if your money is tied to your debt payments.
Of course, we cannot avoid spending this season. You need to expect that you will really spend beyond your usual budget. How much, will depend on your own self-control. Although everyone is expected to spend a lot this season, that is not an excuse to be irresponsible with your money. The season does not remove the obligations that you have towards your debt problems.
While your obligation is still there during the holidays, it is very easy for you to make your debt situation worse. That is one way that your debt can ruin your holiday spending. Because of that, here are three things that you need to remember when planning your holiday amidst your debt situation.
Create your holiday budget with your debt payments in mind.
As mentioned, the season of generosity does not extend towards your credit obligations. Your lenders and creditors will still expect you to pay your dues during this time. So when you are setting your holiday budget, do not forget to keep your debt payments in mind – at least, you should include the minimum amount. If you have limited finances, your debt payments should not be sacrificed. You have to pay at least the minimum.
Organize your due dates to avoid missing payments.
Do not make your debt problems worse by missing out on your payments. Admittedly, there will be a lot of things going on this time of the year. You have to decorate the house. You have to prepare various feasts for the different celebrations. You have to list, buy, wrap and send the gifts that you will share with the important people in your life. You also have to accommodate all the social events that you have to go to. Of course, there are other activities that will also make you busy that may not even be connected to the holidays. For instance, your job will require a lot of end of the year reports. These will also keep you preoccupied. There are so many things going on that there is a huge possibility that you will miss out on one or two payments. To avoid this, you have to organize your payments and set up reminders that will help you pay your dues on time. Being organized can help you make money because it keeps you from wasting it on late penalty charges.
Check your finances to see if you can afford to make advance payments.
If you have a bonus coming up and you did not allocate it on any expense this season, then you may want to use it to make advance payments on your debt. Of course, this is only applicable for the accounts that will not charge you with a prepayment penalty. For example, you may want to pay the full balance of your credit cards. You will not only save on the high-interest charges, this will also be one less worry for you this season. You can talk to your creditors to negotiate with them.
Amidst everything that will happen this season, it is important for you to be smart about where you will spend your money. Do not make your debt problems worse by sacrificing your credit payments so you can look good in front of your colleagues. It is not worth it to be in debt just so you can give expensive gifts to your family and friends.
How to stay away from holiday debt
Although this season is all about generosity, there are many ways that you can display that trait even if you have limited resources. Remember that the saying “the best things in life are free” is true. You need to look beyond what your limited money cannot buy so you can enjoy this season. It is better for you to focus on what you can give that does not require you to spend money. If you make a list, you might be surprised at the options that will be presented to you. This is a great way to help you stay away from the dreaded holiday debt.
According to CreditCards.com, the holiday season is the time when credit card balances usually go up. The month after that, in January of the next year, it is the time when delinquencies rise. That means a lot of people are not able to pay their balances come January.
If your holiday budget is small because of your debt problems, do not make things worse by using your credit card to pay for the things that you need to spend on this season. Here are tips that will help you make sure that there will be no holiday debt for this year.
- Strictly follow your holiday budget. Start by creating a budget and sticking to it. Your holiday budget will tell you just how much you can afford to spend this season. If it indicates that you can only spend $250 on gifts, stick to that amount.
- Know your priorities. If you have limited finances, you need to list your priorities so you will be assured that they will be financed. For instance, when you are making a list of gifts that you will give, put your family on top of the list. Rank the recipients according to importance. The people whom you do not mind not giving a gift to can be put at the bottom of the list.
- Do not be generous if you cannot afford it. As mentioned, do not go broke just because you want to look good in front of your friends and colleagues. At the end of the day, you want to be able to give gifts only to those who mean a lot to you. Appearing generous in front of your friends is not worth it if you got that reputation because of debt.
- Opt to give time instead of spending. According to a survey done by PWC.com, 52% of Millennials plan to use their holiday budget to travel or for entertainment. This signifies that they are after a great experience this season – not material possessions. This is something that you can probably consider. One of the most valuable things that you can give to your loved ones is your time. Your children will not remember the toys that you will give them. They will remember the memories that you will make with them.
If you want to know more about spending less this Christmas, here is a video from Lauren Greutman that can give you tips about prioritizing traditions over gifts. In this video, she tells viewers about the family traditions that they have and how it helps them enjoy the holidays without spending a lot of money.