Ah yes, it’s that time of the year! Winter holiday decorations have gone up, festive songs are playing .... and stress levels are at an all-time high for many.
A study from the Harvard Business Review found that of the various factors at play, finance is one of the biggest triggers of anxiety for many during a time when people are supposed to be at their happiest. In a country where many are living pay cheque to pay cheque, it’s not surprising that the holidays can exacerbate an already stressful problem.
If you’re someone looking for some ways to take control of your personal finances and get through this holiday season financially unharmed, here are some tips for you.
Thinking Of Just Putting It On The Card And Dealing With It Later? Think Again!
For many, December is the most expensive time of the year, so it’s no surprise that many of us get a little carried away thinking, “I’ll just put this on my credit card and deal with it later”. According to this study, “spending with a credit card resulted in people spending 113 percent more than they would with cash."
Now if this fact doesn’t alarm you, it should given that the average credit card interest rate is 19.99%! What does this mean for you? Well, if you’re not able to pay the full balance by the payment date in the new year, a $500 balance will have you paying an additional $99.95 in interest! Unless you can’t think of anything better to spend your money on, you would be wise to think twice about leaving a balance on your credit card(s).
Holiday Gift Ideas Based On A Person’s Love Language?
For meaningful gift ideas, consider exploring Dr. Gary Chapman’s “5 Love Languages”. Before you assume that these gift ideas are meant just for a significant other, hear me out. Take a moment and think about the individuals in your life that you're getting gifts for. Do they seem happiest when they are able to simply spend quality time with you - in other words, when your phone is put away and they have your full attention (quality time)? Have they mentioned their love of hand-written notes and letters (words of affirmation)? Maybe you know them to really appreciate when someone is willing to go out of their way to do something for them (acts of service). Are they affectionate beings who just love giving hugs (physical touch)? Or do their eyes light up when they receive a gift (receiving gifts)? Now, I am over-generalizing some of these traits, but you get the idea: physical gifts aren’t always the best gifts, but nor are they the only forms of gifts.
Uh Oh. You’ve Become the Protagonist In “Confessions of a Shopaholic”: Now What?
Credit cards are a tool to access credit - not a borrowing tool. If you're using credit cards as a borrowing tool, you'll face exorbitant interest rates. Overspending can lead to a vicious cycle that can be difficult to get out. If you’ve found yourself in a situation where you’ve spent more than you should have, perhaps a debt consolidation loan may be just what you need to pay off any high-interest debt, save on interest, get out of debt faster, and improve your overall financial well-being.
Credit Score: How it Affects Your Financial Reputation & What You Need to Do to Protect It
Credit scores can have a significant impact on your quality of life - where you live (e.g. through the approval/decline of a mortgage or passing a landlord’s credit check) and your job (e.g. a business loan for the aspiring entrepreneur or more job opportunities for the individual who has access to a car).
For this reason, it is important to understand some of the key factors that affect your credit score and what you can do this holiday season (as well as the rest of the year) to stay on track:
- Payment History: Pay on time and in full when possible.
- Amount Owed: Keep your credit card usage to under 30% of your limit.
- New Credit: For each new inquiry made on your credit report, you will get dinged! If you’re rate shopping for a mortgage or car loan, keep it within a 30 day period as these may be counted as a single inquiry.
Lastly, during the holidays when fraud and identity theft is known to be high. Here are some things you can do to protect yourself:
- Monitor your credit report and credit card statements regularly
- When shopping online, make sure that you’re on a legitimate website and using a secure network (i.e. don’t use a public wi-fi network to make purchases).
- Take advantage of credit card security features such as “account alerts."
We hope you’ve found some useful tips to get you through! From all of us at Borrowell, have a safe and happy holiday season. Don’t know you credit score? Get it for free with Borrowell! It only takes 3 minutes (and it doesn’t affect your credit score).