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Choosing Your Credit Spending Wisely

By Erik Folgate

Here’s an appropriate article for you to read before the biggest shopping day of the year. Have a Happy Thanksgiving everyone!

With the holiday seasons approaching, it is a time of year many people contemplate their financial status to determine their Christmas spending limit. This year, due to the struggles of much of the nation, many department stores have made the decision to start holiday shopping weeks earlier than normal. This decision was made in an effort to help those living on strict budget be more able to afford presents and the other holiday necessities. With more weeks of shopping deals before Christmas, consumers have more opportunity to spread spending out over a longer period of time.

Who Me? Overspend?
With the busyness of the holidays at our doorstep, it may be a great time to take stock of how you are spending money and how you are overspending your money. Beyond the holidays, many people do not realize the dangers of overspending or even what constitutes overspending. One common example of this is using your credit cards for basic, daily living expenses. While some may chalk it up to the convenience factor, many people do not realize that running to the corner convenience store every other day for bread or milk and then charging those items on credit can lead to a financial disaster. Credit cards were not designed for that. Now with stricter rules and higher interest rates, credit card spending must stay controlled or you are putting yourself at major risk.

Holiday shopping is also a prime example of a time for overspending and the reality is – if you have to buy milk and bread on credit – you have no business shopping for presents on credit. The general rule of thumb to follow when spending on credit is if you don’t have the cash to back it up, you shouldn’t be swiping your card. Instead sit down now and calculate an actual Christmas budget based solely on the income you make and the expenses you are obligated to pay. Whatever that number is, should be the limit to your holiday spending. If you happen to have a credit card with a good rewards program or the need for the extra buying protection a credit card often affords, then feel free to use it, provided you have put aside the cash to pay the bill in full at the nd of the month.

Gifts Are Not Required
It is so easy to see credit cards as a source of free money but there is no freedom in debt. Just ask those hounded by debt collectors each and every day. Credit cards were not meant to maintain your daily lifestyle but because many account holders did not recognize that until it was too late, the industry as a whole is under a lot of strain. It is a privilege to have a credit card and an obligation to use it responsibly. Part of that responsibility is knowing when enough is enough based on your financial plan and budget. There is no need to buy extravagant gifts you certainly can not afford for others who also can not afford pricey presents. It’s the thought that counts during the holidays. Celebrate the season and don’t feel guilty over your self-control unless you are prepared to start the New Year off with old, accumulating debt.

Tisha Tolar is a freelance writer providing content for CreditCardAssist.com, where she regularly writes about credit cards, rewards programs and general consumer finance issues.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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