The Credit Card Trap
Losing control over the urge to spend on credit card purchases during the festival season is one of the most common follies. The lure of the ‘Buy Now, Pay Later’ is often too tempting. Here is a checklist of how you can put a cork to it.
* Use debit card whenever possible instead of the credit card.
* Chalk out a monthly usage limit for credit cards. Even during the festive celebrations never exceed this pre-decided amount.
* For minor expenditures such as dinners, movies, home decorations and purchase of sweets and gifts, pay in cash. Credit card swipe should be reserved for bigger expenses such as booking a vacation trip or buying air tickets.
* Make sure that you review the usage of your credit card every week.
Planning always saves
Everyone knows Christmas is on December 25 and Diwali falls in Autumn. You know the timing right from the start of the year but still only a handful actually plan their celebration expenses in advance. There can be tremendous amount of savings achieved through smart and careful planning. Here are some of the most significant savers.
* Holiday vacations if booked 3 months in advance can save you 30-40 per cent in accommodation, and airline tickets booked in advance by a month can save up to 50 per cent.
* Even registration for Christmas or New Year parties if done in advance can ensure that you have the reservation in the right place and that too at a discounted rate.
* Buying gifts in advance when there are sales or offers is yet another source of savings.
Festive season is the right time to express your affections and shower your loved ones with gifts. Despite being a noble social gesture this exercise can burn a big hole into your pocket.
So, here’s what you can do.
* List out the people who really count and deserve being gifted on the festive occasion. Prioritise the list in order to set limit for the price of the gift to be given to each on your list.
* Purchase the gifts beforehand at sales and discount offers which may not be available at the last minute.
* Whenever possible, use home-made sweets and hand-crafted gifts. They not only save money but also add a personal touch.
* Compare prices online.
The more the merrier
Bulk purchases always get a better deal and can used effectively to reduce expenses during festivities.
* The tour companies offer huge discounts for group bookings as compared to individual packages.
* Buying gifts and sweets in bulk is also a source of substantial savings in the festive season.
* Planning parties with friends and colleagues at home or office premises can provide the same thrill at a much lesser cost.
Here’s an essential checklist of pitfalls that one must avoid at all costs.
* Never spend to the limit of credit card.
* Never tap into contingency funds during festivals hoping to rebuild later. That usually doesn’t happen easily.
* Never dissolve investments to enjoy the festivities.
* Taking a personal loan to go on a vacation or buy gifts is absolutely undesirable.
Saving a little every month throughout the year is the best solution to cater for expenses during festivities. Staring the New Year with stable finances keeps the entire year peaceful and offers new avenues for investing wisely with available funds.
—Author is CEO, Bankbazar.com