December is an exciting time of year with Christmas and the New Year approaching as well as summer holidays, but the silly season should be approached with caution and you need to avoid coming back from the holidays with an empty bank account.
Here are 5 tips that will help you through the holiday season and to help you to avoid the debt trap in the new year.
Just Because It’s Holidays It Doesn’t Mean You Can Go On a Spending Spree
Many employers will pay out salaries early for January and you need to be extra careful if this is something that your employer does. Many of us will forget that this salary will need to stretch for up to 40 days or more until the end of January.
This means you will need to budget carefully. It is a good idea to put your salary for January into a separate savings account and fight the temptation to dip into it. You will need to have a budget in place that caters for all your regular payments as well as extras. Keep track of all your expenses, so that you can avoid excessive spending and your January bank balance will look healthier.
If you are worried about overspending, then it might be an idea to rather use cash. Draw a set amount of cash for the things you need to buy and leave your cards at home. This way you are only able to spend the cash that you have in your wallet.
Know Your Monthly Repayments
You might be tempted over the festive season to use your credit card to pay for all your extras, but if you do this then you need to ensure that you can afford your monthly instalments.
You should determine how much you can afford to spend on monthly instalments and not exceed this.
You can also opt to take a personal loan for the festive season as it will have a fixed interest rate that is usually lower than credit cards. Also, with a personal loan, you can only spend the loan amount and can’t get anymore, whereas, with a credit card, you can easily fall into the trap of just swiping for all your purchases. Again, if you take a personal loan for your festive shopping, then make sure that you can afford the monthly repayments and factor this into your budget after the festive season.
Check Your Credit Report Before You Spend
If you do find that you need to use credit to pay for your goods, then you should first check your credit report so you can get an idea of your credit status. Knowing what your credit says can help you to plan your spending and stay within your credit limits.
Your ability to access further credit will depend on your payment behaviour as everything gets reported in your credit report.
Also, you can make sure there are no errors or unusual activity and protect yourself from theft and fraud.
You should make a habit of using your debit card for everyday purchases. This can help you to avoid overspending on your credit card during the festive season. The rule here should be that if you don’t have the money available then you can’t buy the item.
Watch Out for Sales
The best way to keep your budget in good shape without missing out on the festivities is to keep an eye out for sales.
You will find a lot of stores and online retailers having sales during this time of year on everything from groceries to clothing and more. Keep your eye out for sales and see if the items you need are on special. Keep in mind that a sale doesn’t mean that you should go out and buy items that aren’t on your list, because this will lead to overspending.
So have a list and find the best prices for the items on it.
Make sure you don’t end up in too much debt in January by keeping a budget, a list and finding the best deals. If you do need to use credit over the festive season like a personal loan, then make sure that you can afford the monthly repayments from your budget.