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Financial planning tips

December 28, 2016

How to cure a holiday debt hangover

Has too much seasonal spending left you with an aching wallet? These tips will help ease the pain — and prevent it from happening again.

Ah, January! That wonderful month for football, fresh starts and frightening credit card bills.

"Psychologically, shopping gives many people a lot of pleasure," writes Sarah Milton in the retirehappy blog. "There's something quite festive about wandering around in a warm, well-lit space when it's freezing cold outside while we pick out gifts for those we care about. The trouble is, that the nice warm space and generous mindset often lead to us spending far more than we intended to."

If overdoing your holiday spending has left you with a raging debt hangover, here are some smart ways to treat it now and keep out of trouble next time.

Curing a debt hangover

  • Put your credit cards away — frozen in an ice-tray, if necessary. The harder it is to get at them, the better chance you'll have of resisting the urge to use them. Don't put them back in your wallet until you've cleared your balance.
  • Pay off the card with the highest interest rate first. Don't know how much interest your credit cards charge? Now is a good time to find out: You may be shocked!
  • Another way to pay off your cards and modify your behaviour at the same time is the seasonally appropriate "debt snowball" approach. The Canadian Budget Binder blog suggests paying the minimum on all but the lowest balance, and throwing every penny you can at that balance until it's cleared. Then, redirect that money to the next-lowest balance until it's cleared, and so on. You should see results quickly, which will reinforce your smart behaviour.
  • Make it painless — arrange an automatic payment from your bank account straight to your credit card.
  • Forget about the hair of the dog — keep out of the mall! Pitch those Boxing Day sale flyers without even looking at them, and spend December 26 doing something constructive like cleaning out the garage (weather permitting) or the bathroom cupboard. If that sounds too much like work (as opposed to the always-enjoyable task of lining up for hours and fighting the crowds at the big-box stores), make it a PJs day with some good movies and a vat of hot chocolate. Or spend the day outdoors with your family.

Tips for debt-free holiday shopping

  • Make your shopping list and budget based on what you can really afford and stick to it. And when you're done, you're done — no picking up little extras that can add up quickly. "The song tells us that Santa makes a list and checks it twice and that's a good place to start," says Milton. "Knowing who you intend to shop for and how much you intend to spend helps you determine what you can buy."
  • If you have a large family or circle of friends, suggest drawing names rather than buying for everybody. This is a good activity to plan for Thanksgiving dinner.
  • Give yourself enough time to devise and make gifts, rather than blowing your budget on last-minute shopping. You don't have to be super-crafty — there are lots of clever, easy handmade gift ideas out there that don't require mad cooking, sewing or glue-gun skills.
  • Start shopping early enough to hunt for bargains.
  • Give the gift of time: Create vouchers for grocery shopping for an elderly friend or relative, babysitting for a young family, grass-cutting or snow-shovelling for a neighbour with a bad back, or a day of errand-running for a friend who's slammed for time.

Milton sums up her holiday spending philosophy this way: "Whether you love to buy extravagant gifts for a large number of people or prefer to make special gifts for a select group doesn't matter as long as what you choose to spend makes you happy, fits with your budget and doesn't leave you struggling in January."

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