Holiday Credit Cards

Today TaxMama hears from Riki in New York with this concern. “I’m looking for specific advice on how to take control of a large post-holiday credit card balance.”

Dear Riki ,

Actually, the best way to control post-holiday card balances is to start before the holiday.

Just because you have practically unlimited credit, doesn’t mean you should spend without control. (Let’s face it, with the 3-10 card offers in the mail each day, people DO have unlimited credit, don’t we?)

Here’s an idea:

First, decide how much you can really afford to spend on your holiday gifts. And I mean TOTAL. – EVERYBODY!

a) Take into account how many months you want to devote to paying off the balance. Let’s face it,
if you’re going to do this every year, you do not want that total to be more than you can pay off in
one year, including interest. Much too logical, isn’t it?

b) Take into account how much money you can afford to spend each month to pay off that balance.  Remember, you still have to pay for your day-to-day charges throughout the year.

With this in mind, come up with your total.

Then, pick out ONE credit card, just one,  to use for all the spending.

Put the card into a check cover, with a check register.  Write that budget amount into the check register as your balance.

Carry a pencil with you. One with a really good eraser. You’ll see why soon. As you do your shopping, write the amount into the register, as if it were a check. BEFORE your make the purchase. Deduct it from your balance.  Before each purchase, see if that leaves you enough for all your other shopping. If not, erase it – and select something else.  Keep that up until you’re done.

If you’ve done it right, you’ve spent only what you’d planned to spend…or just a little more.

And you already know how you’re going to pay it back.

And remember, you can find answers to all kinds of questions about holiday spending, and other tax issues, free. Where? Where else? At www.TaxMama.com.

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