Monday, 5 January 2015

Holiday Spending Hangover

Christmas has passed and the holidays are ending. The grown-ups have gone back to work and the kids are on their way back to school. The new toys have been organized into the playroom, the boxes and gift bags and wrapping paper have been put out with the recycling and the tree is at the curb. The decorations have been taken down and wrapped in tissue and packed away until next year.

Unfortunately, now is when the Christmas bills are coming in.

You know, for those dozens and dozens of toys that were piled under the tree on Christmas morning? That great big bag of gifts you brought to your parents' place Christmas night for all your brothers and sisters and their kids? Those couple of last-minute things you picked up because your nephew loves Thomas and your niece would adore that princess doll and you couldn't decide between serving sets for your mom so you just bought both? That last-minute flurry of shopping you did because your eldest changed an item on his wish list and it messed with your carefully-planned balance of gifts between kids so you just threw your hands up and bought them all more? Those bills.

The best way to avoid the post-Christmas bill nightmare, of course, is not to overspend in the first place. Careful planning will help keep you from spending more than you should - but only if you stick to the plan. Probably the most critical is not to use credit to finance your holiday shopping. Unless you have the cash to pay that credit card bill sitting in your bank account right now, don't pull out that card.

This is a lesson I learned the hard way over a decade ago when I was a twenty-something just starting my family and living outside my means to finance our lifestyle.

Credit can be such a temptation - the trick is to stop viewing it as money available to spend. Once you get in that cycle of relying on credit to fill the gaps or get you ahead it seems almost impossible to dig yourself out - but it can be done. Put yourself on a tighter budget for your other expenses and force yourself to stick to it. Throw the rest of your disposable income at your debt until it's eliminated. Once it's gone you won't believe how much extra money you suddenly seem to have each month or how much better you feel without that worry hanging over your head.

So take those January credit card bills and open them up. Draw in a deep breath and look at the frightening figure at the bottom of the page. We've all been there. Now take out your pen and paper and figure out - realistically - your monthly budget. Mortgage, house insurance, household bills, car payments, car insurance, gas, groceries, clothes, spending money, bank fees, savings. Add it all up. Write your monthly income in a column next to it. Reduce your variable expenses wherever you can - groceries, clothing, odds and ends. Then take the surplus and throw it at your debt. You'll need to commit to keeping yourself within that tight budget for however long it takes to pay off all the debt - but once it's gone you'll have all that extra money to reincorporate into your monthly budget.

And next Christmas, plan ahead by setting aside a little bit each month to be used for gifts. I set my gift budget in advance for the year and put aside what I need every month all year long. It's a wonderful feeling when January arrives without any extra bills!

Originally published as "Holiday Spending Hangover" on my weekly column at gailvazoxlade.com

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