In today’s economic environment, credit purchases can cost double the original
purchase price and take years to pay off completely, according to Ron Hatfield,
former family financial specialist with West Virginia University Extension Service.
It’s easy to get caught up in the moment, which is how many consumers get into trouble. People often have good intentions of paying off credit card charges at the end of each month, but because of a variety circumstances, most don’t.
Hatfield advises families to make and follow a plan.
- Pay cash for fast foods, gas, and anything that will be gone before it’s paid off.
- Set your spending limits. Track your actual spending by using only one credit card and by keeping a spending log and all receipts in one place.
- Make a list of all the things you are likely to spend money on. Include not only gifts but also such items as decorations, cards, stamps, special food and clothes.
- Then determine how much money you have available to spend and the approximate cost of the items on your list. If the estimated cost calls for more money than you have available to spend, look for items you can remove from your list.
- Another way to avoid overspending is to have a specific amount of cash in hand and not withdraw more money when that cash is gone.
Although you may find it difficult to stick to your plan during the holidays, it may be helpful to think about what overspending could do to you and your family in the long run, Hatfield says.
To cut costs, your family could draw names for a gift exchange, rather than each member buying a gift for everyone.
Finally, families can focus on ways to celebrate the holidays that cost very little or nothing. You can find many ways to celebrate beyond buying gifts.
Spending quality time together doing activities that everyone enjoys could be the best gift your family receives this holiday season.
Another gift may be turning these holiday budgeting steps into year-round habits.
Reviewed by: Pat Gruber, WVU Extension Service Families and Health,
Last Reviewed: September 01, 2014