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Finance 101: Paying Off Your Holiday Expenses

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Paying Off Holiday Expenses

1Forced Savings

Let’s talk about if you paid cash for all your Christmas presents and so forth. Good for you. You’re sitting pretty now. And since you may have tapped out a lot of monthly cash flow last month to do that, you’re now back in the position this month to get back on the savings-train. That means putting monthly money into an automated plan that takes the money from your account so you don’t even miss it. The benefit of paying yourself first is no matter what happens, you’ll always be in a position of having money set aside, rather than not having any money left before the end of the month. So forced savings, monthly, is an absolute priority. If you’re already doing so, good for you. If not, make it a New Year’s resolution.

 

2Paying off balances – Part I

It goes without saying that if you’re going to have a lot of credit card bills, or transactions, coming in, in the days ahead, try to pay them off in full. The minute you miss paying them in full, the interest begins accruing and you’ll find yourself behind the 8-ball with the card companies. Of course, they don’t care very much. After all, that’s how they make their money. Just make sure you pay something. Missing a payment is not only bad for your credit, but it will hurt you when it comes to seeing additional fees, like a late payment fee. I’ve heard of some card companies now charging upwards of 40 dollars for a late payment fee. So rule number one, part 1 today, pay your credit cards on time. If you find yourself not being able to pay the full balance, pay something.

 

3Paying off balances – Part II

The late payment, carrying-a-balance-scenario. The problem with making the late payment is the fine print. That is, the clauses in the credit card statements that allow the card company to jack your interest rates, immediately. All the cards are stacked in their favor. That means if you miss a payment or you are late on one, that 6.9% introductory rate you got could balloon to 16.9%. And there’s nothing you can do about it. Plus, the credit card company doesn’t just assess that on any new purchases… the charge that 16.9% new gouging rate on the current balance you owe, from all those Christmas gifts. Do not, I repeat do NOT make a late credit card payment. You’ll really pay for it, literally, out of your wallet.

 

4Your monthly billing cycle

The billing cycle simply put, is the period that charges appear on your credit card statement, typically a 30 day window. But in a lot of cases, the credit card company can be flexible on changing your billing statement dates. For example, let’s say you have a mortgage that’s due on the 15th every month along with other bills. That last thing you probably want is a credit card bill due on the same day. IF… and I stress the word IF… you’ve been a good customer, with no delinquencies and have paid your credit card on time, pick up the phone and call the card company. Ask them if they can MOVE your billing dates to the 20th or 30th of the month, whenever it’s more convenient for you cash flow. Many will do this.

 

5Rebates, rewards and other purchase incentives.

Ah yes, that new HD TV you bought… you know, the one with the $200 mail in rebate. Or better yet, that new cell phone with the rebate forms you have to fill out. Well, what are you waiting for? Did you know that according to statistics, over 60% of rebates are never redeemed! So when you told yourself you were only paying 600 bucks for that 800 dollar HD, or that new phone cost you only 49 bucks after the rebate. Not exactly. Because the bottom line is that’s not what you paid! Remember, you shelled out more money than that. And now you have all that paperwork and UPC codes and receipts you have to fill out. Hurry the clock is ticking. Do you hear that ?  That’s the sound of time running out!  Get your rebates from those Christmas gifts so those holiday expenses aren’t quite so bad.

Steve Pomeranz
I've been an investment strategist and adviser for over 35 years, leading with a mission of unbiased advice to educate and protect listeners on my weekly radio show on NPR affiliates nationwide. I have been named a “Top 100 Wealth Advisor” by Worth Magazine and “Top Advisor” by Reuters.