The Holiday Money Crunch
It is very easy to be caught up in the holiday season of gift giving. However, running up those credit card balances can have adverse affects on both your credit rating and your ability to pay future unforeseen expenses.There are a variety of ways to prepare for the holiday season. A very sensible step you can take is put money aside each month with the purpose of having that money to spend during the holiday season on others. A good goal is to put away 10% more money than what you spent on friends and loved ones than the previous year. This way, even if you do have a little money left over after all is said and done you might be able to get a great deal on something for yourself on one of those post-holiday sales. Or you could take any excess funds and start your holiday fund for the following year. To make the most out of your money consult your financial institution on what savings funds, etc. you can set up so that the money that you put away each month is gaining a little bit of interest while it sits in the bank.
However, not everyone is able to put money away each month for the holidays. Unexpected financial crisis strike many individuals each year putting many individuals into an ever increasing spiral of credit card debt. Sorry to say, those individuals often feel the pinch of the holiday season the most.
Those same individuals often watch as their credit card debt continues to skyrocket as the New Year begins and interest rates rise. Quite often panic sets in, and they look for the easiest way out. Nowadays radio and television commercials are littered with debt relief agencies that may or may not be able to help you out. Before taking any drastic steps, you need to evaluate your situation.
Ask yourself:
1. How much money do I bring in each month?
2. How much money do I spend on set expenses (such as car payments, mortgage payments, rent, electric, insurance, etc)?
3. Do I have extra money to put towards paying off credit card balances if I were to cut back on other expenses such as take-out, entertainment (sporting events, movies, or cable/satellite TV)?
4. Would getting a second part-time job be feasible or would it hurt my performance at my full-time job, affect my family, etc.?
5. What other alternatives do I have?
6. Does taking out a Home Equity Loan or Line of Credit make sense?
7. Or does refinancing my mortgage and possibly lowering my monthly payment make it easier to pay off those credit card bills?
As with any important financial decision, evaluate your current status. Next, look at your options for fixing your current financial problems/issues. Talk to different people and organizations that may be able to assist you. In the end, the most obvious long-term choices should be staring you in the face. Just remember, once you fix your credit card debt situation that you need to plan ahead for the next holiday season.
