JOINT BASE CHARLESTON, S.C., –
Brightly strung lights hang off branches and an endless supply of presents bulge from beneath the holiday evergreen. To hear a child's joyful screeches or to see a person's eyes light-up will surely leave a giving person satisfied - but at what cost? How long will those precious moments take to pay-off - months? Years?
Often times, after the holiday season, credit card bills will start rolling in, piling up and building new stressors of trying to fulfill yet another monthly obligation to creditors. This stress can be avoided by having not only a strict spending plan, but some wise conservative spending habits as well.
"Before the holidays make sure you have developed a spending plan and keep within it," said Suerjee Lee, Joint Base Charleston - Weapons Station Fleet and Family Service Center financial education specialist. "It is very important that service members try not to go over their spending plan because once they do, often times they find themselves spending the rest of the year trying to pay it back.
"A family should start saving a year ahead of time," she continued. "They should sit down and go over their monthly income and expenses and then decide on an achievable goal for the time period you'll be saving. It is best to save over a long period of time, but any amount saved is going to help."
"My wife and I began saving for the holidays in August," said Petty Officer 2nd Class Alejandro Lopez, a Ship's Serviceman at Naval Health Clinic Charleston. "We have a set amount that we can afford to save each month so in December, we can spend that money and it puts no financial stress on our family."
Developing a spending plan can determine what goals a person has and the time period needed in order to achieve it. A spending plan takes an in-depth look at a person's debt to income ratio. Lee recommends that the average debt to income ratio should be less than 20 percent.
"By understanding how much money is coming in and how much is being spent allows individuals to establish a goal for the holiday after they have prepared an emergency account of at least three months of expenses," said Lee.
According to Lopez, creating a list of friends and family members that you want to purchases gifts for can minimize the number of gifts purchased. This is a great way of staying within your holiday budget.
The FFSC developed the following tips for last minute holiday shopping to assist service members who haven't prepared for the holiday season or for those who need help staying within their budget.
Develop a spending budget.
· Boost your holiday spending account: Look for additional household income while also cutting down on expenses like food and entertainment if possible.
· Consider creative gift giving: gifts that are hand-made and homemade can assist in saving money.
· Look for shopping deals: Coupons, special discounts and retail sales can help add up substantial savings.
· Avoid last minute shopping: Shopping under stress can lead to more spending. Plan your trips in advance and avoid convenience shopping.
· Pay with cash when possible and spend wisely. Paying cash helps you stick to your spending limit.
· 'Tis the season to be jolly, not vulnerable: after the holiday season, order a copy of your credit report to insure you are not the victim of identity theft.
· Avoid the post-holiday debt hangover and don't overspend: Once you have completed your shopping list, stop shopping.
"When a family has been unable to prepare a holiday savings amount over time, they should sit down and budget a spending plan," said Petty Officer 1st Class Eric Young, NHCC assistant command financial specialist. "Service members who have developed spending plans understand what they can and cannot afford which prevents them from spend more than their budget allows or from living off of credit."
"If you haven't been saving for this year's holidays don't get a new loan and don't get a new credit card," said Chief Petty Officer Justin Sweat, Naval Support Activity command financial specialist. "Getting a loan or credit card now could create a cycle that would prevent a member from being able to save for next year's holidays."
According to Sweat, although many service members may feel they will be able to balance their debt and pay it off by the following season, many fall behind and find themselves taking out another loan, causing not only more debt but some unwanted interest rates as well.
"I think the holidays are about the thought," Lee said. "If you don't have the money for an item, then do not buy it. Find cheap or free alternatives - you can even get creative and give a handmade item. Be really strict with yourself; if you can't afford something, just remember to prepare and buy that item for next year. It's not the end of the world if you can't afford it right at that moment."