The holidays are already in full swing, which means a few things: pumpkin products galore (I’m looking at you, pumpkin perfume), candy cane–flavored everything, and the very real possibility that your carefully calculated budget is about to be challenged by seasonal spending temptations.
If you’re using your credit card for holiday purchases, pay it off in full each month.
For the average person’s bank account, the potential extra spending is challenge enough. But if you’re someone on the lookout for a home or apartment, holiday spending could very well end up hurting your chances at snagging the perfect digs. But why? How?!
Spending behavior can be more damaging than the actual expenses
When you apply for a home loan or submit info to a potential landlord, you’re giving a sneak peak into your finances. Lenders or rental agents want to make sure they’re accepting a candidate with good borrowing history. In many cases, this means a candidate with strong credit history and solid, (generally) predictable spending patterns. Seeing a large deviance during the holiday months may give them the wrong impression!
So how can you protect your financial plan for smooth sailing through the holiday months?
Keep close to your credit utilization rate
If you actively use a credit card for your holiday purchasing, keep your expenses below your credit utilization rate. Spending above it can negatively impact your credit! For most cards, this means spending no more than a third of your credit limit.
P.S. If you’re using your credit card for holiday purchases, pay it off in full each month. Who needs extra interest? It’s the coal in your stocking.
Reevaluate your environment
Oscar Wilde once wrote, “The only way to get rid of temptation is to yield to it.” Though this might sound like great justification for spending in the moment, your future self probably won’t be giving many kudos for taking the advice.
So what’s a person to do faced with sale signs at every twist and turn?The answer is a twofold process:
- Acknowledge the marketing strategy behind most of these holiday campaigns. This will give you greater power in the dynamic and prompt you to be more critical of each purchase.
- Take yourself out for a date … away from it all. If you find yourself tempted to spend, remove yourself from the most tempting situations. If you’re going to window-shop, leave that credit card behind, or better yet, bring only the amount of cash you’ve budgeted to spend!
Create a backup plan alongside your budget
We’d all like to flex our willpower muscles 24/7, but even science shows we have limited reserves … especially as the scent of pumpkin spice wafts through the air. Having a spending plan is crucial, but perhaps even more important is formulating a plan of action for those times when you fall off track with your budget.
A single slip-up doesn’t mean your holiday spending is doomed. Instead, what matters is how quickly you bounce back!
Match your spending with savings
Instead of putting money toward that chic (but expensive) candy cane mansion centerpiece, create a plan of action that encourages putting away extra cash into your savings fund.
An easy trick is to match any extra “splurge” with an equal contribution to your savings. This not only prompts you to acknowledge impulse purchases, but also bulks up your savings for that down payment.
Remember, saving doesn’t take a winter break
While I wish I could pack my budget off to Fiji for the winter break (don’t I wish it!), budgets don’t take a break this time of year. If anything, the holiday season is one of the most important times to hold your budget close.
So hunker down, seal up those spending leaks (don’t worry, this can be done with hot spiced cider in hand), and enjoy feeling closer to your home-seeking ambitions.
