Peschke: Make a budget to avoid holiday excesses

If you haven’t already fallen prey to the Black Friday, Shop Local and Cyber Monday promotions on television, in the newspaper and on electronic media, there’s still time to avoid bankrupting your finances.

First, determine whether you should be engaging in a shopping spree to begin with. Here’s a few questions that might help:

• Do you argue at home about money?

• Do you ever hide what you buy?

• Have you thought seriously about filing for bankruptcy?

• Do you struggle to pay the rent or mortgage?

• Are you paying some bills late?

• Have you used up more than 30 percent of your credit lines?

• Do your debts keep you awake at night or interfere with your work?

• Do you have no savings?

• Are you receiving collection calls or letters?

• If you were out of work, even temporarily, would it mean an immediate financial crisis?

Answering “yes” to two or more of these questions should be a warning to avoid that spree. Old, but still valid, advice: Make a reasonable budget and stick to it. Don’t leave out items in addition to gifts, such as decorations and groceries for entertaining.

Five things to remember when mall shopping:

• Don’t carry your checkbook or more credit cards than you will need. Make copies, front and back, of all your credit cards and leave them in a safe place at home. If your wallet is lost or stolen you will have easy access to your account numbers and your bank’s customer service numbers to call to cancel the cards. If possible, carry your wallet in an inside pocket of your jacket, not in your purse or back pocket. The same applies to your phone. Both are targets for thieves in the stores, when they know you are distracted.

• Don’t carry lots of cash. Use ATMs when necessary to replenish your funds.

• Don’t shop in a hurry or at the last minute. Set aside time for shopping after you have scanned the sales ads. This is the same for shopping online.

• Never shop without a list. That will make sure you have covered what you need, but you won’t overbuy when the marketing gremlins get you.

• If you are still paying off last year’s spending, don’t add to the debt load. Think about writing notes to those who are usually on your list and offer some services or special get-together times when the holiday season is over.

Keep in mind that overspending has some really bad consequences that you need to consider before going overboard during the giving season. In addition to deflating your bank balance, you’ll encounter these troublesome lingering problems going forward into 2014.

Adding debt to existing debt is a real “no-no” if you are not paying off your credit cards every month.  Obviously this adds to the interest due, and month after month you will be paying interest on the interest – a really bad idea.

Future borrowing power will be diminished. If the need arises for new purchases or lines of credit, lenders will look at the current debt load and may deny new credit.

Excessive debt, especially if it cannot be paid timely leads to lower credit scores. Applying for new credit leads to credit inquiries, which potentially lower scores, as well.

Excessive debt during the holiday season often leads to “holiday hangover,” which, in turn, can disrupt your home and work life far into the future.

Avoiding the temptation to overspend during the holiday season will make for a much more relaxed and enjoyable new year. Exercising a little spending self-control will go a long way to ease the tension of debt overload and you may find that the satisfaction and enjoyment of simple time spent with friends and loved ones, doesn’t depend on exchanging gifts that you can’t really afford. It’s a cliché, I know, but the season of giving can mean giving time and affection, not just cash.

If you would like a brochure about Christmas spending to share with family or friends, call 815-338-5757 to request one.

• Virginia Peschke is executive director of Consumer Credit Counseling Service of McHenry County in Woodstock. 

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