Dunnan on Dollars

  Personal Finance Tips from Nancy Dunnan

The Debt Set
Fixing That Holiday Blow-Out 

January 04, 2008 - If you got carried away with holiday shopping this season, you aren't alone. According to Consumer Credit Counseling Agencies, credit counselors see some 40% more clients in the month of January than any other time of year. But just because you are part of a large group doesn't mean you should behave like a lemming. You would be wise to get back on track.

1) Begin by checking your credit card debt. Write down the dollar amounts. The cold hard facts should serve as motivation to cut back on spending until you clear up your unpaid balances.

2) Leave credit & debit cards at home. Pay with cash or by check. Psychologically it's more difficult to shell out cash, so you'll wind up not only spending a lot less but avoiding those outrageously high fees on unpaid balances. (Of course, you will need to use a card for big purchases and/or items that you may wish to return.)

3) Set a limit on walking around money. Determine how much you need on a weekly basis for newspapers, snacks, bus or subway fare and other incidentals. Continual runs on your ATM play havoc with any budget.

4) Write it down. How much you're spending. Do so for one month. You may be surprised, even shocked at how much you're involved with for manicures, drinks with colleagues, fresh flowers, brunch, bowling and beer, impulse purchases.

5) Get lower credit card rates. If you have a good credit history, call you credit card issuers and ask for a lower rate. You may land one, especially if they think you will take your business elsewhere.

6) Check your bank's interest rate. You might want to leave your checking account where it is, but move your savings account if its rate is lower than those paid by www.INGdirect.com (4.10%) or www.EmigrantDirect.com (4.65%). Neither has opening minimums or fees.

7) Sign up for automatic transfers. From your bank account or paycheck to a high yielding money market fund. If you don't see it, you won't spend it.

$TIP: Your employer may offer an automatic savings plan or purchase of EE Savings Bonds. The rate on bonds purchased as of November 1, 2007 is 3%.

8) Set up your own Christmas Club. Total up how much you spent on the holidays. Divide by 12. If you spent $2,000, you will need to save slightly more than $166 per month to meet your goal: a debt-free 2008 holiday season!

- Nancy Dunnan

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