Jaqueline Vega is trying to avoid the holiday debt trap.
She is shopping for a big family.
“Two boys, two girls, my husband. I have my mother and my father, my mother-in-law, my sister, my sister-in-law, their children,” Jackie said.
Jackie admits she wound up in financial trouble one Christmas past.
“I ended up signing up for the Macy’s card and I started just that same night. We just maxed it out,” she said.
Shopping sprees like that one and a credit card she got in college that she never made a payment on left Jackie struggling with her credit score. She ended up seeking help from counsellors at Consolidated Credit.
“People get into debt by not having a budget and not having a list,” said April Lewis-Parks, Director of Education for Consolidated Credit
Consolidated Credit has a holiday survival guide complete with a spending planner. Another company called Clearpoint offers an online interactive tool that will tell you how much you should spend on gifts, parties, travel, food and donations depending on your income. Both help you make a detailed list.
“If you have a list of what you want to buy, for whom, and then an amount that you want to spend on each person and you stick to that you won’t get into debt. You won’t go over,” April said.
She explains that the idea is to spend only what you can pay for in cash.
“If you have to use credit, stick to an amount you can pay for as soon as the first statement comes in,” she said.
She also suggests calling your credit card company before you go shopping to see if they will reduce your interest rate. And she says to shop with the card that has the lowest APR and use one or at most two cards. Having too many lines of credit open hurts your credit score.
“You also need to not go shopping with your children,” Jackie said with a laugh.
She says she has learned a lot of tricks dealing with her money problems.
Aside from leaving the kids at home, she says she’s no longer tempted by the discounts stores offer for signing up for a credit card.
“The problem is the interest rates on store cards are usually 23 to 29 percent,” April explained. “What people do is they go in, they use the card. They get the discount. When they get the bill, the interest is added on and it’s much more than what they saved."
Jackie now teaches her kids to stay on budget.
She says this year her big family has decided Christmas is for the kids.
“Having a big family, and now that everyone’s a bit older, we said just focus on having the kids with their gifts. And then for the adults, this year is the actual first year that we are trying the Secret Santa.”
And remember the holidays are meant to enjoy your family and friends! If you don’t have money to spend, make crafts or bake goodies with the kids, wrap them up nicely and gift them to those you care about.