Category Archives: Managing Debt

Tips for Smart Holiday Credit Card Use

Budgeting, Frugal Living, Managing Debt,

Tips for Smart Holiday Credit Card Use couldn’t come at a better time.

Tips for Smart Holiday Credit Card UseThere is a right way and wrong way to use credit cards. For many of us the holiday season is the one time of the year where temptation may have us reaching for our credit card beyond what we planned for. It’s a wonderful time of year and all the sales, social activities, and celebrations may cause us to lower our spending guard.

Nobody wants to have financial regrets after the last of the eggnog and candy canes are long gone. Here are some Tips for Smart Holiday Credit Card Use.

7 Tips for Smart Holiday Credit Card Use

#1- Create a Budget Plan.

Set a holiday budget and stick to it. If possible always make this a part of your yearly budget so that you have the money saved or will have available when your credit card bill comes. As an example I have a yearly $1500 Christmas budget to cover everything from the grand-kid’s gifts to the Christmas cards.

This budget plan should also break down your budgeted spending by type: Gifts, Decorations, Party Supplies, Events, Spontaneous Fun, etc. Everything that you plan on doing and buying during the holidays that requires funding from your holiday budget.

#2- Keep a Shopping/Spending List.

Make a list of every planned holiday expenditure based on your budget plan. List names of people you wish to buy a gift for, any gift details, and the budgeted amount. List all of your budget planned spending types and stick to it. Aside from staying on my spending plan, I use my lists to keep me on track while shopping and to get in and get out as quickly as I can.

#3-Take Advantage of Credit Card Rewards.

Use the best reward credit card that you have. This is Smart Holiday Credit Card Use bringing you financial benefit by getting credit card reward’s cash or travel points back for buying what you budgeted for. I pile as much as possible (within my budget) on my best rewards card that pays me back 2%.

#4- In-Store Credit Cards.

Some stores offer their own credit cards with super promotions and discounts for using them. The savings can surpass what your rewards credit card can offer. We have received phenomenal discounts using our Kohl’s card during their sales promotions.

#5- Track What You Spend.

Tracking all your charges is key to staying on budget. Log all of your spending and track against your budgeted amount so that you can stay on plan. If you are using more than one credit card, like using your reward card and an in-store card then also track by card so there are no surprises and nothing is over looked.

I am totally old school. I have a small notebook and I list and total everything with a pencil. Use an Excel spreadsheet, Quicken, or whatever your preference is but just do it.

#6- Evaluate and Adjust.

If you find you overspent somewhere then adjust your budget by shifting amounts from something else in the budget to cover it. You may have even come in under budget on some items by getting a better sales price than planned. In any case the point is to not have any surprises and come within your planned holiday budget when it is all said and done. I still try to beat my Christmas budget. Anything I come in under budget is a head start on next year.

#7- Have a Payoff Strategy.

The absolute best strategy is to pay off the credit card bill as soon as you get it before the due date so that you pay no interest. Paying credit card interest is not Smart Holiday Credit Card Use. IF you have to carry a balance then be sure to have a payoff strategy. The strategy to have if you know going into the holidays that you will be carrying a balance is about your credit card choice.

Instead of using your rewards credit card use one that offers zero interest on purchases for a set period of time. You may even purposely get a new credit card for the holiday season that offers no interests for the first few months. I know many people whose payoff strategy is to use their tax refund in February or their yearly bonus from work. Those are only valid strategies if you do get a tax refund or bonus.

Final Comments about Smart Holiday Credit Card Use

The holiday season can be a wonderful time where we can spend time with friends and loved ones. For many it is a time of worship and reflection. It should be a time without financial regrets or distress and hopefully by using some of these Tips for Smart Holiday Credit Card Use we all will avoid that.

Do you have a Smart Holiday Credit Card Use strategy?

Are You Financially Responsible?

Financial Independence, Managing Debt

Are You Financially Responsible? First off the term “financially responsible” has a very broad meaning. At the core it just means spending less than you make in income or also known as living within your means. If you have a large salary or you are a gazillionaire then that should be a fairly easy level of financial responsibility to hit. However we have all heard of high-paid celebs or mega lotto winners that couldn’t maintain financial responsibility and were hitting the skids.

Are You Financially Responsible?The higher levels of financial responsibility takes things to a different level where you are not only living within your means but you are going beyond that even without having a huge salary or the riches of a kingdom backing you up. There are some key financial-state attributes that it takes to reach higher levels of financial responsibility.

You make a modest or higher salary for the area of the world you live in.

But you not only live within your means but you are also able to:
Have your own personalized strategic spending and saving plan.

Set a budget well below your means and live a smart frugal balanced life where you don’t feel like you are living a deprived life but one where you have removed spending waste from you lifestyle so you can maximize saving and investing.

Save money toward your long-term goals.

Whether that is early retirement or eventual retirement, etc.

No debt.

Or having a solid escalated debt repayment plan with timelines and tracking to measure your progress.

Have an emergency fund to carry you for 3 to 6 months of living costs.

Or cover an unplanned unforeseen expensive cost that may happen.

Have the spending discipline to only use your credit card for convenience and for receiving the credit card’s rewards cash or points.

ALWAYS paying off the balance each month so you never pay interest on a balance owing. Never using your credit cards to make ends meet during the month and carrying a balance. At the highest levels of financial responsibility you may even develop a tendency to vomit in your mouth at the thought of using your card to buy clothing, shoes, dinner out, or some other item and paying interest on that purchase.

Saving for and paying cash for large purchase items.

Like a replacement (reasonable) used car, appliances, taking vacations, etc.

Avoiding any kinds of loans other than a Mortgage.

Shoot for a low-interest rate Mortgage for a modest home. Seek limiting payments to less than 30% of your income.

You don’t need to keep up with the Jones, Smiths, or anyone else.

Understanding the difference between needs and luxurious wants so you don’t succumb to the temptations that are all around you.

Where are you on the Financial Responsibility Scale?

The more of the above key financial-state attributes of the financially responsible you have going for you the higher you are on the financial responsibility scale. Being anywhere on the financial responsibility scale is by far better than being financially irresponsible.

Final Comments

Becoming financially responsible is the first step toward reaching financial independence. It is a process and does take discipline and control to complete the journey.

There may be challenges along the way but stay focused, there is a whole lot of living to do between when you start your financial journey and when you reach your goals. Just keep plugging away at your plan.

Are You Financially Responsible?