If you’re like most Americans, you go all out for the holidays and take on extra debt in the process. While this isn’t a good yearly practice, it might be especially damaging this year, as the pandemic caused many people to use credit cards to make ends meet. Adding more debt to your budget is not only damaging to your finances but your future wealth as well.
Luckily, you don’t have to spend big money to enjoy the holiday season, especially with the CDC’s advice that you should celebrate at home. And maybe the money you do have to spend is hiding right inside your budget.
Spending the Holidays At Home
Since the CDC recommends staying home for the holidays, you don’t have to worry about travel expenses. In addition to that, you don’t have to find money to buy your second cousin twice removed that gift you know will just end up in the closet. In short, those extra expenses you might normally see during the holiday season disappear, which comes in handy when you are watching your dollars.
Even though you don’t have those extra costs this holiday, you still have presents to buy, cookies to make, and stockings to stuff. But where are you coming up with the money to do that without increasing your credit card debt and sinking deeper into a liability hole?
Free Up Available Cash
Budgets are tight in 2020, and chances are you’ve had to rely partially on credit cards to make ends meet. The last thing you want to do is add to that debt, so you want to find extra cash in your budget that you can use to celebrate the season of giving.
The first thing you want to do is look at your income and expenses to see if they match. In other words, are you bringing in enough money to cover all your bills? If not, you need to either increase your income, decrease your expenses, or both. With unemployment at record highs and the CARES Act protections ending soon, you might find it difficult to improve your income right now. Still, look for ways to pick up a side hustle to boost your cash flow if your regular income source isn’t bringing in what it used to. It doesn’t have to be forever, but another job might help make up the shortfall in the near term.
The other thing you want to do is look at all your expenses and see which ones you can decrease and which ones you can eliminate entirely. Do you need Netflix or Amazon Prime right now? Could you decrease your cellphone plan or your TV channel lineup? Contact your creditors and ask them if they can lower your bill because a lot of times they can, and all you have to do is ask.
Make a Plan to Eliminate Debt
Once you address your income and expenses, it’s time to look at one specific type of debt that will keep you drowning for the long haul — credit cards. They can be a saving grace in an emergency, but if you rely on them too much, you’ll carry a balance and a bill that will follow you for a long time. Not only that, but if you have more than one credit card, you’re making multiple minimum payments, and that alone will drain your budget.
Johnson Funding can help with a consolidation loan, which could roll all your eligible credit card debt into one with a single payment and interest rate. By making only one payment a month, you can free up cash to put toward your holiday celebration.
Look Toward the Future
When the holiday is over, use your extra cash to pay down your debt, build a nest egg, or invest in your future. That way, you can make your money work for you.