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Holiday sales can be very tempting especially when you walk into a store and see some cool item for 70% off. But resist the temptation. If the item isn’t on your shopping list, just don’t buy it. Make sure you stick with your original budget at all times.
Resist the perks
You’re probably carrying at least one credit card that includes rewards in the form of points or cash back. If so, you’ve probably already received notification of “double” or even “4x points” on certain things. While it can be tempting to whip out that card when dining out, buying stuff on Amazon or purchasing groceries in order to earn those juicy points, don’t let this bust your budget. We have one credit card with cash back but when you do the math, we get one cent for every dollar we charge. This means that to get $100 cash back we would have to spend $1000. Remember that the bill for that spending will come due– in the form of your next month’s credit card statement. And that no deal is a good deal if you can’t afford it or if it’s not in your budget.
About those credit cards
While it's always better to pay cash we understand that credit cards can be an easy and convenient way to pay for things. If you use them responsibly they create paperwork that can be used to create a budget (as noted above). In fact, in this case they are actually a bit better than cash. However if used irresponsibly, credit cards can turn become a huge nightmare. You could end up having to pay interest charges of 19% or even higher and be in debt for years. If there is a reason why you must use credit cards, try to pay off your balances every month. Failing this, at least make more than the minimum payments required. We saw one example recently where a person had $10,000 in credit card debt at 13.10% / If he were to make only the minimum payments each month it would take him 27 years to pay off the $10,000 and he would end up paying back $21,271.
Think about a balance transfer
If you are carrying high interest credit card debt one of the things you might do before the holiday shopping season is transfer your balances to a 0% interest balance transfer card. There are cards like this available where you would be required to pay no interest for as long as 18 months. This could give you a sort of “ timeout" period where all of your payments would go to reducing your balance. If you were able to heavy up on your payments you might even have your entire balance paid off before your interest-free period expires.