It was “the most magical time of the year” and now many may still be paying for it. Some sources claim that many Americans have averaged approximately $1000 in debt following the holidays. Shockingly, many people survive the holidays with no debt. With a few disciplined tips, anyone can look forward to a debt free Holiday season in 2018.
- Figure out what you spent in the holiday season in 2017. This includes holiday cards, gifts, excess food expenses and special Holiday events.
There are multiple online and smartphones tools that can assist monitoring expenses like Mint.com.
- Holiday expenses from one year can be a good gauge of what to expect the following year with some exceptions-use your totaled expenses from 2017 to make a budget for 2018.
- Before making other luxury expenses, pay off your 2017 debt as fast as possible.
Many programs such as Dave Ramsey’s Financial Peace University suggest using a cash system to prevent accumulating more debt and freeing up income to pay down debt.
- Begin saving for the holidays in 2018. If expenses are expected to be $1000, split the budget up among the months left in the year to save for it. If it takes two months to pay off 2017’s holiday debt, 10 months remain in the year and $100 a month would need to be set aside to save for the Holidays.
- Put the money in a separate account.
Almost all bank institutions allow you split your accounts into folders to easily view your accounts. Label an account as “Gifts” or “Holidays”.
Do not withdraw money unless it is being spent on holiday expenses!
Autodraft your funds into it every month before to prevent spending before the holidays arrive.
- Stay within your established budget for the holidays!
Make a list of all expected gifts you intend to give and determine a budget for each one.
What if your budget doesn’t cover your list of desired gifts? Plan ahead and get creative. Watch for sales on items that would make good gifts, and stretch your budget. Talk to your kids about your budget and use the limited budget as a way to teach healthy financial skills.
First and foremost, establishing a solid budget that is less than your income, is the ultimate goal and best way to prevent debt following the holidays. Unfortunately, managing finances for many is like beginning an exercise program for the first time in a long time. It is painful, it hurts, it takes a lot of work and there are days you give up and cheat. But when the hard work is complete, you will benefit the rewards and you just might have a fuller wallet.
Writer Bio: Summer Bolte
I spend most of my time and days with my three kids, husband and dog. My kids frequently play near me as I garden, cook, DIY and volunteer. My most unusual paying job has to be feeding fruit flies in a research lab, and my most fullfilling job was being an oncology nurse for seven years.