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How to Avoid Racking Up Debt During the Holidays

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The holidays bring a lot of excitement and cheer. But is also a time characterized by a lot of spending. Statistics show that holiday spending goes up every year in the last few years. Unfortunately, holiday expenditure can take a big chunk out of your credit card.

It may feel great while the holidays last but the feeling may not last when you find yourself up to your neck in debt accrued during the holidays. Debt can mess up your life and interfere with your plans especially at the beginning of the year. The question is; can you still enjoy the holidays and still manage to keep off unnecessary debt? Yes indeed! Here are proven ways on how to avoid racking up debt during the holidays.

Avoiding Debt During the Holidays

Work with a Budget

A budget helps you to plan for the available resources and keeps you from doing spontaneous shopping. In your budget, categorize your spending and set money allocation for each item. This can help you have a general figure of the amount that you want to spend and also help you to know where to give more weight. A budget would be worthless if you don’t stick to it; be sure to strictly adhere to it and you will be grateful.

Use Cash to Pay for Expenses

Holiday debts result from credit cards and other loans. Research shows that people who use credit cards for shopping are likely to use many times more money than those that pay cash. There are different ways in which you can put aside some cash for the holiday:

  • Sell stuff that you don’t need in the house. This can be furniture, play gear for kids, electronics, kitchen gadgets, etc. As long as they are in good condition and someone can put them into good use, they are better off bringing you some cash.
  • Set up a holiday account early in advance
  • Use your Christmas bonus to boost your expenditure.
  • Cut cost on your normal expenditure to save for the holidays

Adopt Cost-Effective Holiday Events

Taking your family for a cruise around the Caribbean Islands and lodging in 5-star hotels is a great idea. However, if you will still be struggling to pay the debt come next year; it is time to re-evaluate your options. You can still have a memorable holiday with your family and friends without necessarily breaking the bank. Here are some cost-effective options:

  • Spend time with your family and friends at home and in the process share meals and gifts
  • Plan for traveling at a time when it is likely to be less expensive and save towards it
  • Consider Picnics and Parties

Save on gifts

Buying gifts for all your family, friends and other important people in your life can turn out to be one big expensive affair and especially if you don’t have enough cash set aside to cater for this. However, you can also make the gifts genuine, thoughtful, and memorable at a relatively low cost using the following tips:

  • If you are in the service industry, offer a free session of your services as a gift
  • Get creative and make gifts such as cards for your children’s teachers, boss, workmates etc.
  • Instead of buying a gift for each of your friends, bring them together and cast lots where each buys a gift for one and gets one from another
  • When coming up with a list of gifts to buy, include other options of about the same cost to avoid spending more in case the first choice goes out of stock or is unavailable

Shop Early

Shopping early helps to spread out your spending and also gives you time to shop for great deals. Since holidays are already fixed, come up with a list of everything you need to buy and start buying. Be on the lookout for discounts and offers such as the end of summer sales and stock up on items with the best deals.

The Bottom Line

The Holidays don’t have to leave you with the bitter after taste of racked up debts. With proper planning, a few adjustments, and being flexible enough to accommodate cost-effective ideas, you can still enjoy your holiday without disrupting your future financial plans.

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Tips for Recovering Financially After Divorce

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If life was a fairy tale, every marriage would last ‘until death’. Couples would spend their lives sharing not only love but co-depending on all matters including finances. Unfortunately, the reality is sometimes not kind and some marriages end up in divorce.

This new phase leaves some spouses unscathed while others are left with massive debts, new financial responsibilities, or a lack of enough know-how on how to manage personal finances. Finding your way back to financial freedom is not easy; it takes time and dedication. To put you on the right path, here are five tips for recovering financially after divorce. 

#1 Start by Dealing with Your Emotions

Repairing Finances After Divorce

Divorce comes with grief and anger from the lost love, emotional support, shared dreams, and so on. This has a draining effect on your quality of life and spiraling into depression is a common occurrence.

If the depression goes unchecked, you risk falling into irrational behavior like going off-budget leading to more financial ruin; to avert this, seek counseling. This could be from a therapist, joining a support group, or even opening up to a trusted family member or a religious leader.  

#2 Create a Plan

Now that your assets have been split, you have to take care of all financial obligations that come with your share. List every asset and debt to know exactly what you are dealing with. This will help you in coming up with a detailed expenditure plan that addresses your income against debt repayments and future goals.

Identifying your financial limits will also come in handy in ensuring that your expectations are realistic and achievable. Create a formal plan, complete with an investment program that takes current income into account and one that is tailored to help you meet your set goals.

#3 Check your Credit

During the marriage, your credit score may not have mattered, especially if your spouse was the sole breadwinner and paying off bills never concerned you. Being alone means your creditworthiness will now come into play; you have to know your credit score which will greatly affect this.

A low score may result in adjustments on mortgage payments, difficulty in getting a job, or even an apartment. Immediately after the divorce is finalized or better still during the proceedings, check and start improving your credit score.

#4 Increase your Savings and Income

Divorce may call for cutting back on your expenses or a complete lifestyle downgrade. That said, being divorced should not mean being miserable. If you are unemployed, start looking for a job to supplement your alimony check. You can also look for a second job, if you already have one, to increase your current earnings.

A successful financial rebound is pegged on the size of your savings. With meager savings, you may be forced to over-rely on credit cards and personal loans to maintain your lifestyle. This can be avoided by adopting a savings plan; stow away as much money as your income allows, this will shelter you during emergencies or unexpected expenditures.  

#5 Seek Expert Advice

Securing your finances is not an easy task even for the rich or staunch savers. This is where the services of financial advisors come in: They guide you in completely separating your finances from those of your ex and making sustainable plans for the future. 

You will receive expert advice on how to; close joint accounts, transfer house and other asset deeds to your name, update beneficiary information on your will and insurance, balance your accounts, prioritize savings, file taxes, and how to go about any other money-related task that your ex used to handle.

Bottom Line Divorce is stressful, but the pitfalls can be reduced by adopting ways to keep your finances healthy. These five steps will not change your financial situation overnight but are a good place to start. In a nutshell, you should start by accepting your situation and dealing with the emotional turmoil. Once your mind is in the right place, come up with a plan on how to increase savings and income, and improve your credit score. Lastly, don’t shy away from engaging an expert to help you in making divorce settlement less complicated and guiding you through your financial projections.    

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Spring Wedding? Tips on Saving Money on Your Destination Wedding

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Are you planning for a spring wedding? You are not alone; many love birds like planning their destination wedding for this time of the year. Spring is that unique season of the year where love is in the air, flowers are blooming as plants are blossoming.

Unfortunately, a wedding budget can kill your dream of a spring wedding before it sees the light of day. The question is; can you still enjoy an awesome wedding on a tight budget? Indeed you can. Our tips on saving money on your destination wedding have got you covered.

Spring Destination Wedding

Choose a Resort Offering an All-Inclusive Bundle

All-inclusive wedding bundles will enable you to get a flat rate on your whole wedding package. In fact, they can save you hundreds and even thousands on your wedding if done right.

These bundles may include food, sporting activities, drinks, makeup services, spa services as well as other guest events. As for drinks, you can have any of the three below:

  • Cash bar
  • Open bar
  • Consumption bar

A consumption bar can help you strike a balance between your guests getting some free drinks and paying for extra ones. You can make the bar open to your guests but set a spending threshold or a time limit with the owner. If the guests hit the limit or reach the set time, it can then be converted to a cash bar. This will save you money.

Another advantage of wedding bundles is that costs involving decoration, parking, photo sessions, and transport are reduced since your location is the same.

Combine Your Wedding and Honeymoon

Some resorts will offer you incentives and discounts if you combine your wedding with your honeymoon. Having your destination wedding and your honeymoon in the same location will help you save on traveling and other costs

You should, however, visit the place prior to the wedding to make sure it is diverse and interesting enough for both occasions. Another way to save would be to pack travel-sized items that you will need for your honeymoon to avoid buying from vendors.

Slash your Guests List

Naturally, a destination wedding doesn’t attract hundreds of guests; this ultimately reduces the financial pressure that comes with your wedding. Still, if there is a way you can further slash the guest list, do it by all means. 

Select an Offseason Date For Your Wedding.

Offseason wedding dates attract low rates and costs charged on weddings by resorts. Find out places which offer discounts for weddings on certain dates. As good as it sounds to your pocket, it is important to make sure that the dates you choose for your wedding won’t lead to a low turnout.

Additionally, for wedding festivities, you can choose a weekday to ensure even as guests come they won’t be overstaying as they also need to get back to their commitments.

You can also save your wedding costs by scheduling your wedding for a less traditional time of day. If for example the ceremony is planned for a weekday afternoon, the venues will charge less as compared to a Saturday afternoon event. Your guests might even drink less.

Consider Local Lenders for Your Wedding Supplies

Not everything you need for your destination wedding can be found where you are going to wed. You may need additional items and services. Consider local vendors who can offer reasonable prices from the wedding location rather than bringing vendors from home.

If you come with your vendors you have to cater for their travel and accommodation costs. Furthermore, if they are bringing items with them to a different country, you will have to cover the shipping cost directly or they will be indirectly included when you get priced.

Make sure you get recommendations from family and friends about the best vendors from where you are going to wed. You can also use Google and social media to find good vendors in advance.

The Take-Away

Destination weddings are the trend nowadays; this doesn’t mean you need to break the bank to have one. With proper planning, flexibility, and any of the above tips that suit you, you can whisk your love away to say ‘I Do’ in a destination of your dreams.

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Improving Your Odds of a Lower Interest Rate

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Getting a Low Mortgage Interest RateHomeownership is a huge financial responsibility you have to be prepared for. Everyone knows that buying a home can be expensive, but that doesn’t mean there aren’t ways to save on this purchase. Considering how much your interest rate can tack on to the cost of your home, homebuyers should do what they can to get a low rate.

Here are a few things you can do to improve your chances of getting a better interest rate on your home loan.

Consider a larger down payment

Homebuyers pay a down payment when they are purchasing a home. You’ll see many homebuyers making a down payment between 3% and 20%, sometimes more. Paying a larger down payment can lower your mortgage interest rate because it will decrease the loan amount. Since the down payment will be subtracted from the loan amount, which is equal to the cost of the home plus closing costs, you won’t need to actually need to borrow the full cost of the home.

Improve your credit score

Lenders use credit scores to get a better idea of an applicant’s financial health, habits, and stability. High credit scores are much more favorable than lower scores when it comes to borrowing because a high score makes lenders believe that person is less of a risk. Since your credit score is one of the factors used to determine your mortgage interest rate, before applying for a home loan, take a look at your credit report and see if there is room for improvement.

Purchase discount points

Discount points can be purchased at close to lower a buyer’s mortgage interest rate. The cost of each discount point equals 1% of the loan’s amount and reduces the interest rate by 0.25%. So, if your loan amount is $250,000, one discount point will equal $2,500, which will get an interest rate of 5.25% reduced to 5.0%.

Although discount points can get you a lower interest rate, one thing to note when considering purchasing discount points is how long it will take to get your money back from this purchase. It is recommended to only purchase points when keeping the home for a longer period of time because you want to ensure you break even or recoup the cost of the points in savings.

Sign up for AutoPay

You have to pay your mortgage every month, so why not save some money while doing it? Lenders sometimes offer a rate discount when borrowers sign up for Auto-Pay and have their mortgage payments automatically withdrawn from their checking or savings account. In order to maintain the discount throughout the life of the loan, borrowers must remain on Auto-Pay. If removed, the rate discount will no longer be applied and their payments will increase.

Shop around

It is always recommended for homebuyers to shop around. You want to ensure you get the best deal available, and if you only check out one lender, you can’t be sure that another lender could have offered you something sweeter. What some buyers don’t know is that they can ask one lender to match another lender’s offer. If you have quotes from multiple lenders, but there is one you prefer, you can bargain with them and ask them to give you the lower rate that another lender has offered. They won’t want to lose your business, so chances are you’ll get that rate.

Ask for a lower rate

Every lender has certain rates that customers can receive for their mortgage. When you apply for a mortgage, you may not get the lowest rate the lender offers, but that doesn’t necessarily mean you can’t. Your lender can be flexible with your mortgage interest rate, but you won’t find out unless you ask.

 

 

 

 

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