To avoid a post-holiday financial hangover, avoid loading up your credit card(s) with last minute purchases. Credit cards are a good thing if not used for long term financing. The interest rate on most credit cards can run from around 10% to 22% and it is not tax deductible. First and second mortgage loans are deductible on your taxes, as are student loans (subject some limitations).
It is really too late this year to think of effectively managing your Christmas spending unless you do some quick planning and are willing to act with a lot of restraint. What can you do? You should prepare a budget to see how much money you have available to spend after you pay all of your living expenses. It is really quite simple. On a spread sheet, enter your take home pay at the top. Below, enter all of your recurring expenses (monthly expenses that must be paid). That would include rent or mortgage payment, insurance, utilities, car payment and insurance, bus or subway charges, parking expenses, medical insurance and meals. Subtract this from the income and what you have left is for entertaining and presents. It is simple but it can be painful. There will be a more thorough discussion on year round budgeting in a future article.
If you really want to be prepared next year, start using a budget this January and set aside a little money each month for Christmas. There are ways to save on Christmas by shopping sales all year. My youngest son was overheard telling a friend once that the only time Mom paid full price on his gifts was at Christmas and birthdays. She later told him “I wouldn’t count on it on those two occasions”.
Here’s wishing y’all a Happy Thanksgiving!