How to avoid the holiday debt blues
(NC) It's hard to believe, but the gift-giving season will soon be upon us. Personal finance experts say that you should be taking steps now if you want to avoid the holiday debt blues in the new year.
“Many Canadians struggle with their finances during the holiday season,” says Wade Stayzer, the vice president of retail and investment services at Meridian, Ontario's largest credit union. “But if you are proactive, organized and prepared, you'll be able to keep a handle on your spending and enjoy the season without the worry of a financial hangover.”
Meridian offers tips on how you can now start budgeting:
Set your budget: Creating a budget is essential to ensure you stay on financial track this season. Gifts will probably account for a big chunk of your budget, but don't forget to include all the holiday extras including decorating, travelling and entertaining.
Be like Santa and make a list: Start early in the season and create a detailed gift-giving list of all the friends and family members you will be exchanging gifts with and be sure to allocate the proper budget limit per gift.
Keep track of your spending: Creating a budget is just the first step in budgeting for the holidays; having the discipline to keep to it is the hard part. By tracking your spending throughout the holidays you will have a better shot of celebrating without the stress of breaking the household piggy bank.
Give yourself plenty of time and look for deals: By having more time to shop around for the perfect gifts, you won't need to overspend at the eleventh hour. Plus, you can be selective and wait for sales.
Don't tap into emergency reserves or retirement savings: No matter how tempting, you need to stay focused on what the longer term goals are for these funds. It's easy to put off longer term goals for shorter term needs, but it might be difficult to get back on track if you start to dip into these savings.
According to Stayzer, using credit cards over the holiday season is fine but there is one important thing you need to remember:
Don't charge more than you can afford to pay off quickly: Most credit cards have high interest rate charges, so try not to accumulate too much debt by using credit cards because you will end up paying more than you borrowed.
More budgeting tips are available online at meridiancu.ca.
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