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The post-holiday credit crunch

Taking control of your finances will pay off all year long

For many Americans, overspending is as much a holiday tradition as turkey and pumpkin pie. Gift-giving, entertaining and a general atmosphere of excess and celebration soon give way to the cold reality of January, and how to pay off those holiday bills.

“Use of charge cards sky-rockets in November and December,” according to Patrick Vandenberg, manager of Consumer Credit Counseling Service. “Credit is much easier to get than it used to be, and many consumers now carry 10 to 15 credit cards, and use them all. With plastic, it's all too easy to lose track of how much you're really spending until the bills arrive.”

And the real danger is the mounting interest that accumulates month after month on your credit card balance. “Many people choose to make the minimum payment required by their credit card,” says Vandenberg. “If you maintain a sizeable balance, you can end up spending twice what you would have spent had you paid cash.” 

The smart way to use credit cards is to pay them off every month. And reevaluate the number of cards you really need; get rid of all but two or three. It is much easier (and less costly) to prevent credit overload than to resolve it after-the-fact.

Start planning now to avoid a spending hangover after the next holiday season. Spread your gift purchases throughout the year, taking advantage of post-season sales to find real bargains. Those last-minute “panic” purchases tend to be much more expensive. Take advantage of your bank or credit union's Christmas Savings Club, or start your own savings account for gift purchases. Decide how much you want to spend in 1998, and then set aside a portion of that budget on a weekly or monthly basis.

If financial problems are putting a strain on you and your family, consultation with a professional money management counselor is one of the benefits of your EAP. Whether you need guidelines for planning and following a budget, or help with out-of-control credit card debts, help is available. 

Call your EAP at (414) 257-2124 or 1-800-236-3231.