When the holiday season rolls around, many of us naturally turn to our credit cards and treat them as a viable way to plump up our budgets for gift giving. Sure, credit cards can be a real life saver when cash is tight, but the secret to using our credit cards intelligently for purchases over the holidays is to stick to the rules, stick to the plan and do not overdo anything.
Rules? Yes, of course there are rules.
Before you buy anything for the holiday season, you absolutely must be willing to sit down and commit to some basic rules for how your credit cards will be used. Furthermore, you absolutely must muster up the strength to stick to those rules no matter what happens along the way.
First and foremost you are going to want to be setting a spending limit, by taking a look at your finances before you go out shopping. How much can you afford to spend on each of the individual gifts without digging yourself into some kind of a financial hole? Regardless of whether it is $20 dollars or $120 dollars, you need to set your limit and commit to it, regardless of whether you find some last minute must have gift that you cannot live without. The spending limit that you set is your spending law, not just a guideline to follow. This limit is what is going to keep you from carrying a huge balance on your holiday purchases, because why should you be paying your Christmas expenses off in July?
When you do set a spending limit, make sure to include all of the essentials like Christmas dinner, tree, decorations, Christmas cards and small gifts for people like coworkers and colleagues. Factor everything in to your budget otherwise you will end up with last minute surprises that could have been avoided.
Next you are going to want to decide where you should shop. If you have retail store credit cards offering rewards or discounts, then you need to decide whether or not it is your best interest to make use out of those. You should absolutely not wait until the very last minute to get your holiday shopping done, especially if you want to take advantage of discounts and special rewards during the winter shopping months. By doing your shopping all throughout the year, you are better able to take advantage of the sales as they come up, rather than simply hoping for them to come up in the later months of the year.
Personal finance experts have a name for the spending we do during this time: Holiday hangover. This brings to mind the feelings that the shopping process normally conjures when you overspend, including headaches and nausea. If you spend the year shopping and paying off the bills instead of racking the bills up all at once, you will be a lot saner come Christmas.
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Originally posted 2008-12-07 05:51:37. Republished by Blog Post Promoter
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