How to Recover From Holiday Spending

While many people consider the holidays the best time of the year, they’re undeniably also the most expensive. Between the costs associated with hosting and attending holiday parties, buying gifts, purchasing items to decorate your home, and all the other expenses, many people start the New Year in a not-so-stellar financial state.

If this sounds familiar, don’t stress. There are many quick and easy ways to pay off your holiday credit card debt and replenish your savings account in no time at all. Follow these 7 tips to pay off holiday debt and regain control of your finances.

Return Unused and Unwanted Gifts

Let’s face it everyone gets holiday gifts they don’t actually want. Instead of letting these items collect dust in your home, return them to the store to get a little extra money. Even if you don’t have the receipt, most stores will give you merchandise credit, which you can certainly put to good use. The same rule applies to unused gifts. If you bought gifts for people and never actually gave them out, return the items to the store, get a refund and put the extra money towards paying off your credit card debt.

Create a Budget

You have to be in control of your finances to create a strategy to pay debt off. Write down and calculate all your necessary monthly expenditures, such as rent or mortgage payments, transportation costs, and utility expenses. Then add up your total amount of debt. Use this total to make a budget that’ll help you pay off debt and avoid accruing even more.

Transfer Balances to One Credit Card

While not always the best move, consolidating your credit card balances onto one card can save you a great deal of money. Before making the move, compare interest rates, see if there’s a fee to complete the transfers, check the terms of each card and consider your credit limits on each card. If you’re able to find a credit card with a lower interest rate and attractive terms and conditions, not only can this save you money, it can also help to raise your credit score.

Use Your Tax Refund to Pay Off Debt

Everyone loves getting the extra springtime “tax bonus” each year. Instead of spending yours freely, dedicate the full refund to paying off your holiday debt. While it might be tempting to spend the funds on a new bag or a vacation, think of how good you’ll feel by getting closer to being debt-free.

Cut Back on Expenses

Save extra money by cutting back on non-essential spending. For example, if you typically eat out most days of the week, start bringing your lunch to work and stay in for dinner all but a couple nights per week. Or if you’re a bit of a shopaholic, vow to stop buying new clothes until you’ve paid your holiday debt off.

Save Cash Gifts  

If you received monetary gifts this holiday season, you’re probably filled with ideas of how you’d like to spend the funds. While you’re probably not going to want to hear this, saving that money and putting it toward the debt you incurred during the holiday season is the most financially savvy thing to do. The longer you let balances sit on your credit cards, the more interest you’ll incur, making your debt even greater. So use the money to bring your debt levels down and then save up to reward yourself for your sacrifices in a few months.

Earn Extra Income

If your job offers overtime pay for working extra hours, put in a little more time at the office to earn additional income. Getting a temporary part-time job is another great way to supplement your regular income and get those debts paid off fast.

See a Financial Counselor

It’s never easy to ask for help, especially when it comes to your money. But seeing a financial counselor, who can help teach you how to budget and get yourself out of debt, can make a world of difference.

Final Word

The holidays are a pricey time of year. We are all susceptible to getting carried away with expenses, as we want to give our loved ones the world. If you’re feeling overwhelmed with debt, don’t worry! With a little savvy planning and a bit of financial sacrifice, you’ll be back on your feet in no time at all.

Damaris Olaechea, NerdWallet


Is a Shorter Mortgage Smarter?

With today’s low interest rates, more borrowers find shorter-term options affordable. The monthly payment for a 15-year, fixed-rate $100,000 mortgage at 5.38% is $811 (principal and interest only), compared with $600 a month for the same amount borrowed for 30 years at 6%.

While the 15-year mortgage takes a bigger bite out of your monthly budget, it allows you to drastically trim the interest paid overall. In this example, you’d pay the lender nearly $70,000 less in total interest with a 15-year mortgage than you would over 30 years ($45,931 vs. $115,838).

If you can afford higher monthly payments, should you go for 15 years? Earlier freedom from mortgage payments and immense interest savings are two reasons for doing so. But before deciding, you need to ask yourself a few other questions:

Is there a better way to use that money?–When you put extra money into house payments, it’s like earning a return on that money equal to the mortgage rate, notes Jack Harris, research economist at the Real Estate Center, Texas A&M University, College Station, Texas.

“If that amount could be invested somewhere else at no risk at a higher rate,” he advises, “then you should pass on the 15-year mortgage.”

Do you need the bigger tax break?–You pay off a 15-year mortgage sooner, and thus the interest portion of your payments dwindles faster than with a 30-year. Same goes for your tax deduction for mortgage interest.

But for many borrowers, the tax break issue isn’t crucial and gets overplayed, Harris contends. “A lot of homeowners don’t even take the tax break” because it doesn’t exceed the standard deduction.

Is your income variable?–If so, you may want to avoid locking into higher monthly payments. You could fall short some months, risking default.

Uneven Income Calls for Proactive Money Strategies

It’s feast or famine for a lot of freelance writers, artists, and seasonal workers, but it doesn’t have to be. With a budget and some discipline, even workers with fluctuating incomes can experience some of the stability that their 9-to-5 friends and relatives enjoy.

Follow this advice to keep your budget on track no matter your cash flow:

* Control monthly costs and minimize fixed expenses. Try to reduce and revise expenses you have control over such as rent, phone plans, and cable. Even if it only saves you a few bucks each month—over time that savings adds up.

* Save some of every paycheck. Put extra money into savings instead of spending it. That is one of the most important things self-employed workers can do. Having money on hand to use for future basic expenses is critical when paychecks don’t arrive as regularly as the bills do. Experts suggest saving around 20% of your income as it arrives to cover tax liabilities and to establish a rainy day fund.

* Prepare for taxes. Keep careful records to capitalize on allowable deductions come tax time. The process doesn’t have to be super complicated—programs like QuickBooks are useful, but spreadsheets and even checkbook ledgers can work just as well.

* Get better at budgeting. Developing—and sticking to—a spending plan is key. Consistency helps minimize stress and prevent overspending when money is flush. And that will keep you in business not only when income is light but for the long term.

* Separate personal and business accounts. Maintain a business checking account and credit card that are separate from personal ones. Not only will separate accounts simplify tax preparation, they also will make it easier to track the earnings and expenses necessary for budgeting. Having all your financial accounts at Hopewell Federal Credit Union gives you more than convenience. It gives you peace of mind, knowing that the people at your financial institution truly understand your needs.

Money management takes work and discipline, but is necessary if you want to keep working the way you are now. The longer you do it, the more experience you’ll get, and the better you’ll get at it.

Need help? The professionals at Hopewell Federal Credit Union can help you develop a spending plan and help set up the business accounts you need. Stop by or call us today at 740.522.8311.

5 Steps to Creating a Realistic Budget

ImageBudgets: we all agree that they’re good to have. However, despite our best intentions, they never seem to match up with our real-world spending behaviors. If that sounds like you, keep reading. The key to creating a realistic budget is to work with your habits, not against them. Follow these five steps to understand yourself and your money, so you can create a budgeting plan that really works.

1. Get to know your cash flow

Before you create a budget, you need to know how much money you have coming in each month. You probably have a general idea, but have you taken everything into account? Do you receive a regular paycheck? Are you getting any benefits from the government, or money from your parents? Do you have a deposit account that pays dividends, like a savings account or CD account? Every little bit helps. Don’t include money you might have in the future, like a scholarship you applied for or a promotion you expect to receive. Budget as if these things won’t happen, and if they do, you’ll have a wonderful dilemma: extra money!

2. Determine your priorities

It doesn’t matter how much money you have; when you’re budgeting, life necessities come first. Focus on setting aside money for things like food, housing, transportation and paying down debt before you worry about anything else. Determining your basic cost of living is 100% non-negotiable.

3. Know thyself

What we really mean is “know your spending habits”. You can’t create new habits unless you’re aware of the ones you already have. Pull out all your account statements and start looking for patterns. Are you buying coffee every morning, for example? Are you shopping online more than once a month? Add everything up. If the total amount of money you’re spending is more than the amount of money you have coming in, it’s definitely time to cut back. That being said, it’s also a good idea to leave some wiggle room in your budget for unforeseen purchases. You can’t possibly account for everything. If you leave room in your budget for surprise expenses like car repairs, you can roll with the punches and come out with your budget unscathed.

4. Make it social

Spending is social. When you’re shopping, you’re often buying things for people, or with people. Why, then, wouldn’t you make your budget social, too? Don’t leave it in a dusty notebook on your desk. Talk about it, and ask your friends and family for tips. Or, better yet, ask your spouse or a trusted friend to be your “accountability buddy”. Make a pact to remind each other of your budgeting priorities while you’re shopping together. It’s easy to make an impulse buy when you’re alone, but it’s harder when someone you trust is there to say, “Do you really need that?”

When someone else is helping you make financial decisions, it may be tempting to just accept their advice without thinking about it, especially if they know way more about money that you do. When you’re applying for a loan or a credit card, your credit union representative can make recommendations, but you always have the final say. If you don’t feel comfortable with a particular arrangement, or don’t think it will fit with your budget, say something! Your lender will approve your loan based on your debts and income, not your living expenses. Only you know your living expenses, and these can be a much better indicator of how much you can realistically afford to borrow.

Laura Edgar is a senior writer for, a personal finance website dedicated to helping you make smart money decisions.

Build Your First Budget

Congratulations! You’ve got your first place, a new job, and money coming in each month. There’s only one problem: It’s never quite as much money as you’d like, is it? Managing your own income and finances for the first time can seem overwhelming, but it’s essential to get off to a smart start. Creating a “plan to spend” instead of spending without thinking is the key to long-term happiness and short-term calm.

To build your first budget after graduation, list your income from all sources first. Next, record your monthly and yearly expenditures, starting with your biggest items, like rent, student loan payments, and car payments.

Be honest with yourself about the difference between needs and wants, and categorize them appropriately by listing your needs first when you budget. Elizabeth Warren, White House adviser and co-author of “All Your Worth,” advocates a 50-20-30 strategy to allocate income. Put 50% toward needs such as rent and transportation, 20% to savings for retirement and emergencies, and use 30% wants such as travel and entertainment.

While using resources like online websites, Quicken, or a spreadsheet can be helpful, they aren’t necessary. It’s more important to keep the budget simple, to be realistic, and to adjust it regularly as needed. Allow for budget busters like car maintenance and fees that only need to be paid yearly instead of monthly.

Give your budget time to work. You might find it difficult to meet your saving goals immediately but, over time, you’ll make progress as you continue to track income and spending. Finally, keep your bigger financial goals in mind as you work to stick to your budget each month.

Come to Hopewell Federal Credit Union for help creating and sticking to your first budget.  Another great tool, visit to view the Anytime Advisor for a fantastic online credit advisor. 

Copyright 2011 Credit Union National Association Inc. Information subject to change without notice. For use with members of a single credit union. All other rights reserved.