Avoiding Debt Over Holidays - Plan Ahead

It’s only July so why am I talking about the holidays? Because lack of planning is one major contributor to why people go into debt. As many as 31% will go into some form of debt during the festive period. Yikes! If you fall into this category of folks who subsidize holiday spending on credit cards, make it your goal not to do this in 2012.

In the July issue of the Money Magazine, there was an interesting statistic that caught my attention. It said people who label their savings account with specific goals saved 31% more than those who didn’t. This makes perfect sense. When you put money into savings randomly, there’s no specific goal. But when you set a goal such as “Christmas gift fund for 2012” it makes it more tangible.

We are just past the halfway mark for 2012, so if you have been falling short on your savings goals for the year (like so many countless New Year’s resolution), why not set a new goal for December now?

The Math for Holiday Savings

For those of you that are counting, there’s 154 days left until December 1, 2012. So, if you want to save $1,000 by 12/1, you can save:

• $6.50 per day
• $45.45 per week or
• $200 per month

Can’t afford so much? How about half? Whatever the amount, the key is to set a realistic goal and stick to it.

Where to Park your Money

I personally like accounts that aren’t linked to primary checking account because you won’t see the balance each time you log into your account. This will make it less tempting to transfer the money back into your checking and spend it. Two online banks I like for savings accounts are ING Direct and Ally (both accounts are paying about 0.80%).