What are the things that come to mind when the Christmas season is near? Gifts, entertainment, travel-anything and everything that necessarily requires you to shell out not just a few bucks but even the entire contents of your bank account. But that's when you're lucky enough to have some money stashed away in the bank. For most people, it can mean overusing their credit cards leading to outrageous credit card balances even before the holiday is over.
You may think that talking about your credit score during Christmas when everybody should think of happy thoughts is out of sync. It is. However, it is better to be aware of how your credit rating is doing even before you have the chance to spend your entire life's income for one season alone.
Christmas is the great time to travel as long as you do not go overboard when spending cash or worse---using your plastic. Despite the fact that majority of Americans are open to the idea of spending less during the holidays, a National Retail Federation survey shows that the average American individual projects to spend at least $817 for shopping, travel and other Christmas-related expenditures!
Americans have become so dependent on plastic that their total credit card balances amount to over $600 billion. This propensity to spend more and incurring holiday debts is evident with a 2003 survey conducted by the Consolidated Credit Counseling Services, Inc. which shows that at least 54% of those who have incurred Christmas debts during the previous Christmas were still paying off their credit card balances by November 2003.
If you don't want to be included in those statistics then here are some budgeting tips to keep your holiday travel and entertainment expenses under control.
Plan Ahead.
You worked so hard the past year so you deserve a break, probably during the Holiday season. While holiday travel is good for your self esteem and physical well-being, it is best to plan your trip ahead to get as much savings from airfare and hotel reservations. Airlines and hotels provide discounts for clients who book and even pay ahead of time. The amount you save can be used for other expenses during your trip.
Save for your holiday travel and entertainment expenses.
Go ahead; go to your favorite destination during the holidays. Entertain your friends and family during Christmas. But make sure you are financially prepared for your travel and entertainment expenses as well. Saving at least $100 each month and putting the amount in your holiday travel and entertainment kitty will allow you to travel and hold parties during the Holidays without breaking your bank account or adding up to your credit card balances.
Try a potluck party.
If you must entertain friends or family during Christmas, why not hold a potluck party where each guest bring his own dish to be shared with everyone? This way, the whole group shares in the entertainment expenses and you avoid overspending and incurring holiday debt.
Choose bargain holiday travels.
Holiday travel can be expensive considering that this is the time when most people would spend money for just about anything and the resorts and airlines will surely be cashing in on this. However, you can get freebies or even discounts if you go on a holiday travel a day before Christmas or even before vacation time.
Set a budget and stick to it.
Know your financial status and make a travel plan or entertainment plan based on that. Once you have a desired budget, stick to it to avoid holiday debt and a possible negative credit rating due to unpaid credit card balances. It is ideal to list all the possible expenses as a consequence of your holiday travel and tailor-fit such expenses to your budget.
The way you spend your money or use your credit card (along with other factors) will determine your credit score. The higher your credit score is, the more attractive you are in the eyes of creditors. You have time to prepare for your holiday travel so why not allocate money for such purpose ahead of time? It is better to develop good budgeting skills and keep your credit ratings high in case you need credit for more important matters when the holiday is over.
Kara Schumann is the founder of New Freedom Credit Consulting and a Certified Credit Consultant. She strives to help people break free from the limitations and humiliation of poor credit and assist clients in achieving financial knowledge, choice and freedom from high interest rates. If you are being harassed by collection agencies or having difficulty qualifying for a loan, contact New Freedom Credit Consulting for a FREE Consultation.
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