Christmas is a time everyone associates with spending. However, there are people who decide to put part of the extra money they receive during the holidays towards paying-off their debts. A lot of people might think that this is crazy, but in reality is a pretty good idea. Of course it only works if you do it in an organized way and avoid falling into debt all over again. According to Dr. Kurt Schindler, Certified Financial Planner® and Manager of Banco Popular de Puerto Rico’s Financial Education Program, if you use your Christmas bonus to pay-off a credit card debt and then charge all the Christmas gifts to the same card or take out a loan, you’re doing it wrong.
If you are willing to try this and you analyze it thoroughly you will realize that the first year is the toughest one, but moving forward in the coming years you may even end up with more budget than what you planned for. Here we give you some ideas on how you can achieve this.
- Start the year opening a Christmas Club and deposit up to $10 weekly. Remember that the amount you end up with will depend on what you save, the more you save, the better it will be.
- In December, use your bonus to pay-off any debt, but remember, don’t fall into another debt that you will end up paying the following year. Carefully, make a list of people who you want to give holiday presents and establish a budget that doesn’t exceeds the amount you have on your Christmas Club.
- If you use your credit cards frequently, make sure to participate in a rewards program, which will help you mitigate costs. The PREMIA®* program allows you to accumulate points on all the purchases you made with your credit cards. You can later redeem those points for products, gift cards and even certificates to redeem at travel agencies. Visit premia.com and learn about our rewards program. You can also use the PREMIA® program to complete your gifts for next year.
Another great alternative is the U Save account. With this account, you, set the date in which you want to withdraw the funds and save a predetermined amount upon opening the account.
The best recommendation is to stick to the list of people who are going to receive gifts and combine it with a spending plan so you will be more aware of the money you have and what you will end up spending.
*The Premia Program is optional and entails a $25 annual fee. Subject to Premia terms and conditions.