{"id":1368,"date":"2020-11-06T09:00:00","date_gmt":"2020-11-06T15:00:00","guid":{"rendered":"http:\/\/ec2-3-209-223-66.compute-1.amazonaws.com\/?p=1368"},"modified":"2023-11-22T15:33:49","modified_gmt":"2023-11-22T21:33:49","slug":"planning-an-almost-debt-free-holiday-season","status":"publish","type":"post","link":"https:\/\/www.accrediteddebtrelief.com\/blog\/planning-an-almost-debt-free-holiday-season\/","title":{"rendered":"Planning An Almost Debt-Free Holiday Season"},"content":{"rendered":"\n

Decorating your home, buying gifts and making elaborate holiday meals are just a few of the things that make the holiday season so special year after year. Holiday fun is a great escape from the doldrums of everyday life, but all that fun and diversion can get pricey. Instead of spending on the holidays and worrying about the debt later, we recommend following some planning guidelines. Your holiday season doesn\u2019t have to be totally debt-free, but these tips will help you spend what you can afford to pay back.<\/p>\n\n\n\n\n\n\n\n

If you recently tightened your budget and have less wiggle room for spending, you might be tempted to fund your seasonal activities with credit. It\u2019s essential to be cautious about using credit cards to pay for non-essential spending. Otherwise, you might wake on January 1st with a credit card hangover that gets the new year off to a bad start. <\/p>\n\n\n\n

Quick Links<\/strong><\/p>\n\n\n\n

Set a Spending Cap<\/a>
Take Stock of Current Debt<\/a>
Using Credit? Set a \u201cPay By\u201d Date<\/a>
Avoid In-Store Credit Card Offers<\/a>
Reduce Spending with Thrifty Holiday Tips<\/a><\/p>\n\n\n\n

Set a Spending Cap<\/h2>\n\n\n\n

Figuring out how much you can afford to spend this holiday season means taking a fresh look at your budget. Begin by creating a holiday budget<\/a> that helps you estimate what you plan to spend and calculate what you can afford to pay for in cash and what, if anything, you\u2019d like to pay for using credit. <\/p>\n\n\n\n

We like using the 50\/20\/30 Budget Rule<\/a>, which says; 50% of your monthly income should go toward financial obligations like housing, food and other bills. 20% of what you make should be put in savings, and the remaining 30% can be used for everything else. You can use this rule both at the annual budgeting level and also at the monthly level.<\/p>\n\n\n\n

Your holiday spending should fit nicely into your budget and be covered by that 30%. Of course, it won\u2019t account for the entire 30%, but you can make tweaks to your spending to set aside as much as possible for your discretionary spending. <\/p>\n\n\n\n

If your monthly obligations are more than 50% of your total spending, then reformatting your budget is going to be a top priority. Consider taking steps to downsize before you commit to seasonal expenditures. <\/p>\n\n\n\n

Take Stock of Your Current Debt <\/h2>\n\n\n\n

Do you already have a lot of debt? Taking stock of your current debt and calculating your debt to income ratio<\/a> (DTI) is a great way to assess your credit health. Calculate your  DTI ratio by adding up all of your regular monthly debt payments and dividing it by the amount of money you make every month. <\/p>\n\n\n\n

\"Debt<\/figure>\n\n\n\n

If your DTI is under 20%, using credit may be less risky for you. If it is higher, charging your holiday spending on a credit card may not be a good idea. <\/p>\n\n\n\n

Ultimately, you want to make sure that whatever you charge to a credit card can be paid back in a timely fashion. Having a sizeable revolving balance will cost you money in the long run and could upset the balance of your monthly budget until you resolve the debt.<\/p>\n\n\n\n

Using Credit? Set a \u201cPay By\u201d Date<\/h2>\n\n\n\n

You might decide to use credit to cover holiday expense for a few reasons:<\/p>\n\n\n\n