Friday, December 3, 2010

Tips to Have a Debt Free Holiday

Ah, the holidays. Good food, good friends, good times and ... good night! Is that what I really spent during the past month? No way!

If this was your reaction last year, you're not alone. The American Research Group indicates that American shoppers are planning to spend less this year than during the previous two holiday seasons. Here's how you can join the trend and keep your holiday spending under control.

1. Keep your eating habits under control. Holiday food can be a real budget killer, as much of it tends to be very expensive. Focus on eating cheap meals between parties and family dinners. Skip a meal once in a while if possible. Both your wallet and your waistline will thank you. And check online for coupons and other promotionals for restaurant meals.

2. Make it a practice to keep purchase receipts year-round, rather than just at the holidays. If you use your debit or credit card for your purchases, make sure that your account provider sends you a year-end statement categorizing your purchases. This will give you a much clearer idea of what you're spending your money on both during the holidays and throughout the year.

3. If you're sick of trolling malls and department stores and of perusing coupon booklets, lock yourself away for a few days and get away from it all to recharge. Go over all of your receipts and purchases, and see what shape your budget is in. If you're overbudget, then consider cutting out a dinner or perhaps a present or two.

4. Limit the gift purchase secrets to the holidays. Of course, you don't want your spouse to know what you spent on him, but maintaining this habit the rest of the year can be a surefire recipe for trouble. Talk about your expenditures with your spouse to make sure that you're both on the same page about your budget.

5. Post your credit card debt somewhere where you will have to see it every day. Don't let this balance get out of hand, no matter what your needs are over the holidays. Pay off this balance in full at the end of the month if at all possible. Use any points that you have accumulated on your card to make further holiday purchases if you can.

6. Don't disrupt your savings habits to get through the holidays. Maintain your retirement savings plan as usual, and always pay yourself before you spend anything. Dipping into your emergency savings may be better than racking up further credit card debt.

7. Sit down before the holidays arrive to create a spending plan or even a special budget for the holidays. Make a pre-New Year's resolution to always compare prices on major purchases, as well as to search for coupons online and in the papers. Consider whether any purchase (especially a large one) is really the best use for your money right now. Buying a new flat-screen TV is always fun, but it may not be wise to do so if your credit cards aren't paid off.


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