YOU Magazine - October 2006 - Budgeting for the Holidays Itís Never too Early to Start Subscribe to YOU Magazine and other timely market alerts from Laurie Gardner.

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Laurie Gardner     Laurie Gardner
Senior Mortgage Loan Originator
Alaska USA Mortgage Company NMLS Unique ID #204060
Phone: (907)796-1202 / fax 907-929-6711
Fax: WA Consumer Loan Co. License #CL-157293
License: Mortgage License #AK157293
Alaska USA Mortgage Company NMLS Unique ID #204060
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Budgeting for the Holidays
Itís Never too Early to Start

Budgeting for the Holidays - Itís Never too Early to Start

For some, merely reading the title of this article may provoke an uneasy feeling in the pit of their stomachs. For others, it may elicit a response such as, ďThe holidays? It's only October.Ē If you identify with the former, we'd like to suggest a mild antacid. If you relate to the latter statement, we're about to provide a mild reality check.

We are less than two months away from Thanksgiving, also known as the official start of the holiday shopping season. By formulating a plan now, you'll achieve more than just the happiest of holidays. You'll ensure that the new year will begin without worries of too little cash flow or too much debt. Here's how.

Learn from the Past
The best place to begin when it comes to planning for this year's holiday spending is to examine what you did last year. Dig up the credit card receipts and checkbook registers, and add up how much money you spent. You'll also want to take notes regarding where you spent it. Don't forget to include money used to purchase gift wrapping supplies, cards, postage, food while shopping, entertainment costs, and special-occasion clothing.

Now that the numbers are in front of you, it's time to form an opinion. How do you feel about last year's spending? Did you spend a realistic and appropriate amount, or did you go overboard? Try to be objective. This analysis will serve as the backbone of your plan.

Look at the Present (Pun Intended)
Financially speaking, how have you fared this year compared to last year? Be sure to look at any changes in income as well as expenses. If your finances haven't changed and you're happy with last year's spending, then you're starting off in very good shape. If your overall financial status has declined, or if you were less-than-pleased with last year's performance, then you've got some work to do.

Begin by looking at the number of purchases you made a year ago. Which ones would you make again and which ones have you scratching your head? It may be time to reduce your gift-buying list and even make some personal sacrifices. You don't need to buy a present for everyone you know, nor do you need a brand new outfit for every party you attend. It's up to you to choose what stays and what goes. The bottom line is that decreasing the number of purchases you make is a great way to spend less money.

If you cannot reduce your quantity of purchases, think about changing the amount you spend on each purchase. The obvious way to accomplish this is to be less extravagant with your selections. A less obvious but often effective approach is to research your potential purchases. Sometimes you end up paying extra for the convenience of one-stop shopping, so look through the newspaper to find which stores are offering deals. Then look on the Internet to see if you can beat their prices by purchasing online. This practice will cut down on last-minute shopping which can be an expensive proposition.

Look Toward the Future
So, you've figured out how many purchases you need to make as well as which ones need scaling back in terms of price. Now it's time to create a budget. Once again, there is no magic formula. Creating a budget and sticking to it requires two main things: common sense and commitment. Let's take a closer look.

A budget should always be based on the money you have, not the money you can borrow. If you are still paying off charges from last year, then you need to avoid using credit cards to make gift purchases this year. If you continue to shop on credit, you will dig yourself into a very deep hole. The amount of money you decide to allocate toward holiday spending should be based solely on what you've saved or what you will save from now until the time you start shopping.

When drafting your budget, start by creating a list of recipients, along with columns for the gifts you intend to buy and the dollar amounts you expect to spend. As you make purchases, keep track of the results. If you overspend on one gift, it is imperative that you make it up somewhere else. Your diligence is one of the keys to staying within your budget.

It's also important that you watch out for potential pitfalls, including impulse shopping. Getting into the spirit of the holidays is one thing. Spending frivolously based upon a last minute decision is something else. You've got a list, and your job is to stick to it!

Another pitfall of shopping involves the money that's spent while you're trying to purchase everything on your list. Restaurant lunches or snacks at the mall will take money out of your pocket that could go towards gifts. Plan accordingly, and eat lunch at home. In addition, pack snacks and bring them with you when you go shopping.

One final thing that may need an adjustment is your overall philosophy. It's easy to look at the budget you've created as a restriction. After all, it's nothing more than a set of rules. The flip side of this is these rules are there for your protection. Sticking to them will not only ensure your financial success, it will free you from the stress which comes from accumulated debt. When you look at it this way, a budget can be somewhat liberating.

Hopefully, these suggestions will help you to have a happy holiday season while keeping your finances intact. You should probably get started! Can you believe it's already October?

License AK# 157293 Washington Consumer Loan Company license# CL-157293 California Residential Mortgage Lending Act, License# 4131067

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