The Holiday Season is the busiest time of year, full of family and friends, good food – and spending. Between the parties, travel to be with family, and gift-giving, it’s practically inevitable you’ll be dishing out a lot of dough. But you don’t have to go into debt during the Holidays that leaves you financially hungover in January and behind for the rest of next year. Plan ahead to minimize your debt, or better yet, not rack up any at all! Avoid the debt collectors by following these 8 simple tips to keep your Holiday spending on track:
Get on a Budget – Start the season out right by planning how much you can reasonably afford to spend and limit yourself to that, no ifs, ands, or buts. This means you’re going to have to budget for those unexpected holiday expenses that tend to pop up.
Treat All of Your Expenditures Like Cash – Don’t set yourself up for failure by walking into the glitzy shopping mall with three credit cards and no idea of what you plan to buy. Preferably pay in cash, but if you use a credit card, treat it like cash – plan to pay off the balance at the end of the month to avoid incurring interest fees.
Don’t Use the Store Retail Cards – These may be tempting, but don’t fall into the habit of applying for store credit cards simply for the 15% off coupon they’ll give you. Each time you apply for one of these it will hit your credit report and can make you look desperate for credit lines. Plus, these cards generally carry high interest rates – often at percentages in the 20s! Steer clear of this shiny Holiday shopping lure.
Be Creative With Your Gifts – Think from the heart instead from the wallet for a change this season. Are you an aspiring artist? Do you have the best gingerbread recipe in town? Consider something homemade, sentimental, for a gift. Chances are you’ll save money and your loved one will appreciate the gift all the more for it!
If you’re like most Americans, you will manage to rack up a measure of debt during the Holidays despite your best efforts. Don’t despair; you can still right the ship financially without spending the whole year trying to pay it off. It will just take a little planning:
Set a Definite Payoff Date – Try to put a plan in place right away to pay your debt off as soon as possible. Maybe it’s March 31st, the end of the first quarter, or maybe you want the debt gone by the time the kids are off school for the summer. Stick to your plan and know exactly how you will pay it off in order to make all you financial decisions fall in line.
Scrimp and Sacrifice Where You Can – Are you getting a Starbucks every morning before work? Make coffee at home. Are you eating lunches out during the work day? Bring a sack lunch. Cut down on dining out, entertainment, and the cable bill – wherever you can. You probably received some gift cards during the Holidays, so make good use of those.
Pay off Your Debts in a Smart Order – Plan to pay off your cards with the highest interest first, making the maximum payment you can afford on those and just the minimum payments on the others. Work your way down the line with your cards so you can avoid paying high interest rates if possible.
Plan for Next Year’s Holiday Season – It’s okay if you take advantage of post-Holiday sales, so long as you’re doing it for the right reason. That cashmere sweater that went on sale for $90 from $120? Probably not the best choice. But decorations, household goods, and practical things you can save until next season will help you curtail spending next year and stop the revolving cycle of debt.
There’s no way to get around it – you’re going to be spending money during the Holiday season. But if you plan early and spend wisely, you can make sure that this Holiday season is one full of merriment instead of financial misery.
Larry P. Smith & Associates, a Chicago Law Firm, focus on consumer rights protection. If you are having difficulties with bankruptcy, identity theft, debt collection or consumer fraud, request a free case review with Larry P. Smith & Associates.
It all revolves around the “wealth gap.” There’s been much chatter about the gap between rich and poor since 2008, and the writers of this CNNMoney story (and others) seem to think the gap is due to race.
Can a recession be racist? Is the wealth gap really race based?
Here’s the breakdown of the effects of the recession along “race lines”…
The wealth gap (2009).
The story relies on data from a 2009 study by the Pew Research Center, which found that:
“[T]he median wealth of white households was 20 times that of black households and 18 times that of Hispanic households.”
The study defines household wealth as:
“the sum of a family’s assets minus the sum of its debts.”
I’m not sure what they group into “other things”. Presumably other debt?
Regardless, the study found that while the Great Recession hammered just about everyone’s wealth, the gap between white households and black or Hispanic households is the widest it has been since 1984, when the government began publishing such data by ethnicity.
“The recession and uneven recovery have erased decades of minority gains, leaving whites on average with 20 times the net worth of blacks and 18 times that of Hispanics, according to an analysis of new Census data.”
The wealth of blacks vs. whites.
The Pew study uses the data from the Census Bureau to highlight the disproportionate effect of the housing market on blacks and Hispanics.
The study acknowledges that:
“The wealth of white households in America has always been greater than black and Hispanic households. But the recession widened the gap significantly”
Why would the recession widen the gap significantly? That implies that those at the bottom fell farther or those at the top rose greater or a combination of both?
Remember that talk above about an “uneven recovery”?
Why it isn’t a race thing.
Dig a little deep and you start to see inklings that even the AP and CNN know that this is not a race-based issue:
“the wealth of white households has probably benefited from the rise in stock prices over the last few years, since a much higher share of whites own stocks.”
If this were really due to race, then we’d be seeing ads from ETrade, Scott Trade, Fidelity, etc.. stating things like:
“$7 online trades*”
* Whites only
or using phrases like
“Minorities need not apply”
Since this is clearly not happening, I submit a better use of the Pew and media’s time and energy would be to conduct a study analyzing the wealth gap in terms of general education and financial education.
Outright racial discrimination is simply not legal, and not present in the majority of the U.S. any longer. Certainly not to the extent that would be necessary to “keep minorities down” in the wealth gap on purpose.
The real problem with these kinds of reports and studies is that it allows people to remain distracted by issues that are no longer real (i.e. racial discrimination) at the expense of ignore real causes of the problem like education and general financial savvy.
I may be going out on a limb here, but I think that most blacks don’t invest in the stock market because they simply don’t hear family members or community leaders talking about assets and investing and building wealth. They get no exposure to that. Instead, they hear about racial discrimination and how white people want to keep them down, all while they can’t do it alone and need a government program to do it for them.
Nobody ever got wealthy living on public assistance.
Further evidence
The study goes on to make the following points:
The main asset of minorities is their home
older whites are more likely to have 401(k) retirement accounts or other stock holdings.
If your biggest asset was your home, then you’re definitely at the lower end of the wealth scale after the historic housing bubble burst. But is that a racial thing?
The AP article points to the “uneven recovery” as the culprit to the wealth gap being so large this time around:
“What’s pushing the wealth of whites is the rebound in the stock market and corporate savings, while younger Hispanics and African-Americans who bought homes in the last decade… are seeing big declines”
Also according to the study, Hispanics are more likely to be employed in the construction industry and more likely to live and buy homes in states such as California, Florida, Nevada and Arizona – each at the forefront of the real estate bubble.
Again, is that a race thing? Is there a law stipulating that Hispanics can only go into construction?
The media and government policy wonks are now lamenting that this pushes our country further into “what the Kerner Commission characterized as ‘two societies, separate and unequal,’”
Focusing on race does nothing but perpetuate this. Instead, we should focus on introducing concepts of personal finance to more minorities. Educate them instead of indoctrinate them into believing that they need a government handout to survive.
This is a common question, as well as a common misconception. The short answer is “no”, paying off old debt does not hurt your credit score. It also doesn’t improve your credit score that much either. Here’s why..
Once a debt hits the 180 days past due mark, it is recorded on your credit history and carries forward as a negative mark for 7 years. Nothing you can do will remove this prior to that 7 year expiration, so in effect the damage has already been done. Paying off that debt is the responsible thing to do, but you won’t be rewarded with a higher score for doing so. It does look better to lenders that you paid it off however, no matter how long it took.
So for debts 180 days past due, it’s better to pay them than not but don’t expect a big bump in your score for doing so.
The underlying reason for this is that creditors weigh your ability to remain current with your bills more than your ability to pay them back eventually. The better way to improve your credit score is to remain current on your debt and pay your bills on time. If you’re just focusing on paying off debt and some of it is past 180 late, then start at the most recent or current debt and work your way back, paying off the 180+ days late debt last.
Here’s an accompanying video clip in which Farnoosh Torabi, Jean Chatzky and David Bach field this question and more. (feed readers may need to view the complete post to see the embedded video)
If, for example, you owe money on two credit cards and a loan, it may be better to take out one large loan, big enough to pay off all three debts at the same time. That would leave you with one payment to make every month instead of three.
Making one payment every month is just easier than arranging and budgeting for three separate payments – and you will only have to deal with one creditor.
You could even reduce the amount you pay every month if your loan has a longer repayment period. However, paying off your loan over a longer period could also increase how much you pay overall, due to interest.
Anyone interested in debt consolidation loans could try an online debt consolidation calculator. They help you to estimate your monthly repayments once you’ve entered a loan amount, interest rate and repayment period.
If your earnings change from month to month, or you’re not sure you’d be able to make regular repayments, you might find a different approach is more appropriate.
Balance Transfer
Another way to consolidate debts, which can work well for credit card debt, is to transfer multiple debts onto a 0% credit card. ‘Balance transfer’ cards don’t charge interest for a set period, after which time the card starts charging interest.
For that reason, a balance transfer could be ideal if you are able to clear the balance before the interest-free period ends. Otherwise, it may be possible to transfer the balance to another interest-free credit card. However, you’d normally be charged a transfer fee each time, something like 3%. For large balances, that could be quite expensive.
Other forms of debt consolidation
There are other ways of consolidating problem debts into one monthly payment without borrowingany more money. These include IVAs (Individual Voluntary Arrangements) and debt management plans.
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