Gerber Life Family Times --- News and tips for familes of all ages and stages of life

Holiday Debt
  A Practical Guide

If you are like many consumers, the three months before New Yearís is when you spend more money than at any other time of the year. Buying presents, having special dinners and parties, and flying cross-country to visit relatives can all add up and -- much of the buying will be done on credit. Itís not surprising, then, that many people get so carried away at the holidays that they can't dig themselves out of debt for months or even years.

If you want to save money, this is the time to make your resolutions -- not after the New Year. You can take some practical steps to help keep your cheer intact before and after the holidays:

Keep a running total of your spending. This avoids unpleasant surprises and helps you avoid being surprised by gigantic credit card bills after the New Year. Keep sales receipts, which will also come in handy when monitoring your credit card statements.

Put off some gift giving. If you won't see friends and family until after the holidays, agree to trade gifts at that point. This way, you'll be able to take advantage of post-holiday sales as well as spread out your purchases!

Pay off your entire credit card bill when it comes. If you donít have a spare $1,000 lying around after the holidays, you can pay $50 a month instead of $25. Doing that, you'll pay off your balance a full year earlier and save more than $100 in interest.

Pay your bills as quickly as possible. Credit cards generally require 2 to 3% of your current balance each month as a minimum payment. For a $1,000 balance, that's $25. But if you pay $25 a month at the average interest rate of 18%, you'll be burdened by this year's holiday purchases well into the next year. And you'll end up paying hundreds of dollars in interest on that $1,000.

Transfer your credit card balance to low interest cards. You'll save yourself a bundle if you pay off your $1,000 balance at 6.9% a year rather than 18% per year. Be careful with this tactic -- too many open and closed accounts may damage your credit rating.

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