It’s the most expensive time of the year. Gifts, traveling, parties and decorations all come with a price tag.
“It is very easy for people to get caught up in the joy of the season,” says the Senior Credit Counsellor of AAA Credit Counsellors and Debt Consultants, David Low. “Especially those who like to give gifts in order to share love or share caring.”
Low says planning for Christmas at the beginning of the year the best way to stay on budget and debt-free.
“Let’s say your budget is $1200 and that’s how much you want to spend on all these people. Then every month leading up to Christmas you are going to save $100, put it in a savings account so that at Christmas time you take your cash and you can have fun, and you’re not going to be in debt at all.”
He says avoid racking up the credit card debt, unless you can pay off the balance in full. “Credit cards are going to charge you anywhere from 20-26%. Which means that every three years your debt will double. You will double all those sale items that you bought. So the idea is only put on what you can pay off in the first month or two following Christmas.”
If you are already struggling with credit card debt, you can always ask your credit card company to lower the interest rate.
“The mistake that most people make is that when they are overwhelmed with their finances, they get another credit card or they raise their limits on their credit cards. Then what happens is they think ‘Oh, that bank money now-that extra credit limit- is my money’. So then they go and spend to that limit. What’s going to happen is eventually they are not going to be able to pay it back at all, now they are in real trouble. ”
Low says always manage and live on what you make, and if you are struggling seek help from a credit counsellor or a bank.