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How to Manage your Holiday Financial Hangover


The holidays are behind us, the presents are unwrapped, toys may already be broken and now the reality is setting in, “How am I going to pay for all of this?” If you’re like many Americans, you may have decided to charge some or all of your holiday purchases and pay for them at a later date.  Your loved ones may be greatly enjoying their gifts, but you are now scrambling to figure out how to pay the inevitable bills. 

            Managing your holiday financial hangover is not as hard as you think.  According to the American Consumer Credit Council the average American spends $935 on gifts each holiday season.  This means many of us may face credit card bills topping $1,000 after all holiday expenses are considered.  Although this may bring about a panic attack, you can break the cycle with a few simple steps. 

Develop a Plan

            Until you have a plan in place to break this cycle, January will always be a scary month to receive credit card bills.  Start by deciding how much per year you can save towards your holiday spending.  Try to be aggressive in the first few months of the year to get your holiday bills knocked off quicker and avoid carrying high interest credit cards.  If you put $200 per month towards your holiday bills, you will pay off $1,000 plus interest in 6 months.  Then, each month after the bill is paid save $100 - $200 towards next holiday season.  You may not have every dime you need come next December, but the financial hangover in the next year will be dramatically less, thus taking less time to pay off your bills.  Within a year or two, you will be paying for your holidays with cash.  The January credit card bill nightmares will be a thing of the past.

Start Now and Be Consistent

            The two most important aspects of this plan are to start immediately and be consistent.  If you wait until March to begin paying down your holiday debt, you will have wasted two months and that will have a dramatic impact on your cash for next Christmas. 

            If you are not consistently following your plan, you will not break this cycle.  Make your monthly payments on time and once the bills are paid off, save money every month without fail.  This consistency will ensure your success.

Tip:  Many banks still offer Christmas Clubs to their customers.  This gives you the ability to save a certain amount of money every month automatically.  Then, typically a check is sent to you in October to pay your holiday expenses.  Check with your bank for details.

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