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1. 4 Keys To Follow To Avoid Credit
Card Debt During The Holidays

2. Business people usually cash in on the holiday
seasons to maximize their sales and profits. It will be
high season for them.
They will stock up, price up and smile all the way to
the bank. They know that people will be less
restrained in their suspending than at any other time.
It possible that you may be among the many who
have suffered post-holiday season financial stress,
and want to make sure it does not happen again.
Your success in this will be determined by how well
you control three critical factors: your increased rate
of spending, the manner in which you finance that
spending, and the heavy financial demands that
follow in the subsequent month.

3. Financing Using Plastic
With holidays like Christmas or the New Year seeming to
come round too quickly, people often find they have not
saved up enough for their celebrations. Moreover, budgeting
is an alien concept during this and spending can spiral out of
control. To cover the inevitable shortfall in resources, the
credit card is an obvious attraction. There are advantages to
using the card to finance your expenditure:
i) It gives you free access to about a month s credit.
ii) It gives you the temporary ability to spend beyond your
current means.
iii) It allows you to track your expenditure.
iv) You do not have to carry lots of cash around with you.

4. Use of credit card, how ever, does carry with it
significant dangers if it is not carefully controlled.
Research indicates that spending could increase
by up to 35% when using a credit card compared
with using cash. Here are some key principles to
help you guard against running into credit card
debt trouble.

5. 1. Spending Plan
If your spending is going to exceed your income for the
festive month, consider cutting intended festive expenses,
or other expenses, to stay within your income. I am
assuming you have drawn up your spending plan for that
period.
That’s where a credit card comes to the rescue. Though
not readily apparent, the use of your credit card can create
distortions in the management of your finances. Unless
you are monitoring your spending in both cash and credit,
there is a danger that you will be uncertain whether or not
you are living within your means. It would therefore be
unwise to begin using a credit card if you are not in control
of your finances, that means using a spending plan.

6. 2. Debt to Income Ratio
Do not forget that use of your credit card adds
to your debt issues. In managing your financial
affairs, one of the key indicators to watch is
your debt-income ratio.
This is monthly debt repayment as a percentage
of your monthly after-tax income, and raises a
red flag when you tinker with too much debt. A
ratio of over 20% is becoming unhealthy. If you
already have credit card debt that is overdue,
do not add to it.

7. 3. Bridging Finance
Use of a credit card is ideally a means of short- term
financing of your operations. That means settling any debt
incurred using your card within days. Paying the minimum
balance will not do. If you are not confident that you can
pay it off in full, you wound do yourself a huge favor by not
using a credit card.
Should you decide to go ahead and use a card, you need to
be prepared for extra costs in interest and penalties
associated with extended credit. This adds to your
expenses, and you need to be ready to be ready to reduce
other regular expense to accommodate this, otherwise you
run the risk of creating ongoing hard-core debt

8. 4. Net Worth
Credit card debt incurred during the festive season
is usually for consumer spending- paying for your
holiday, buying gifts, entertainment, traveling
expenses, and etcetera creates what is known as
consumer debt. This kind of debt adds to your
liabilities, but contributes nothing to your assets.
Your net worth is reduced to the extent of
consumer debt incurred. Shrinking net worth is not
good for your financial health. So do have yourself a
happy holiday. But as you go about it, finance it in a
way that gives you the comfort that you won't be
debt-laden the following month.