How Much Should You Spend for Christmas if You Are in Debt?

I had to go to the store a few days ago to get groceries and other necessities. As I navigated my cart down the isles I noticed the many Christmas displays scattered throughout the store.

While Christmas creeps ever closer many people get stressed about the holidays. There’s the tree to put up including lights, garlands, and ornaments. Holiday baking also has to be fit somewhere into busy schedules.

But there are also gifts to buy and wrap for the holidays. For some this is the biggest stressor of them all. This is especially true if you are in debt.

In fact, how much should you spend for Christmas if you are in debt?

Determine What You Must Buy

The first thing to do if you are already in debt is to figure out how much you absolutely must spend. To do this, begin with a list of everything you must spend money on.

Include cards, gifts, food, and decorations. Don’t forget to include the things you don’t see, such as postage to mail the cards or shipping for gifts to far away friends and relatives.

Since you can’t do anything about the debt you already have, all you can do is try to avoid accumulating more. Try to limit holiday purchases to what is absolutely necessary. Buy simple gifts that are unique but not expensive.

You can also look for alternatives that will be less costly. For example, instead of mailing cards this year, cut these cost altogether by sending electronic versions instead.

Compare to Your Budget

Now things get a bit tougher. You must figure out how your budget can absorb the extra expenses of the holidays.

Make a list of expenses and bills you have to pay between now and Christmas. Include food, rent or mortgage payments, utilities, and any other “musts”.

Weigh these expenditures against your income. The difference is how much you can spend for Christmas.

Slash Spending

If your Christmas budget isn’t going to be enough to cover what you must buy, try slashing your spending between now and then.

Cut out all restaurant meals, or at least go places where your kids eat for free. Lower your grocery bill by cooking at home as an alternative. You can also help by eliminating unnecessary things like alcohol, soda, and many snacks.

Turn your thermostat down a notch or two and grab a sweater or blanket if you are cold and need to warm up while at home.

Anything you can do to slash your spending adds dollars to your Christmas spending budget.

Dig Up Extra Cash

If you have a partner or spouse, it may help you to share your concerns with them. After all, they are half of the equation, so why not let them help you?

Don’t throw in the towel and grab your credit cards to solve your money problems. Instead, put your heads together (two heads are better than one they say) and come up with creative solutions.

Why not call your creditors to see if you can lower any of your bills, such as your cell phone bill? Or, sell some of your unused stuff online to gain a little extra cash?

You might even be able to make a little extra money by driving for Uber or Lyft. Or, hire yourself out to others doing odd jobs, walking dogs, cleaning houses, or anything else you can think of.

Christmas is coming whether or not each of us will be ready. Rather than stress or agonize over it and your debt, do something about it.

Figure out how much you should spend for Christmas if you are in debt and stop the cycle of adding to it every holiday season.

How much do you spend for Christmas each year? Do you go into debt during the holidays?

5 Benefits of Debt Consolidation Loans Every Small Business Owner Should Know

Small business owners are at the risk of changing market conditions. At some point of the time or other, you may run into debts. Adding to your troubles, you need to shell out a high rate of interest for these liabilities. It becomes difficult to concentrate on the lines of progress in your business. Well, it is wise to get debt consolidation loans from established financiers at this stage. Small business owners can clear off all their liabilities at a time, and then concentrate on a single, low-interest loan. Read on to know five advantages that you can get from these loans.

 

Single payment

 

You may have several credit cards with individual balances on each of these. When you get a debt consolidation loan, all these accounts will be consolidated to a single source. The financiers provide their clients with a single large amount, which the latter uses to pay off several loans. When you pay the interest on one liability rather than several, amount of interest per month gets reduced.

 

Reduced stress

 

When you repay a debt consolidation loan, you need not worry about multiple deadlines. It reduces the stress to a substantial extent and you can concentrate on your business prospects. A tension-free mind enables the small business owners to stay on the right track and generate the money required to repay the loan.

 

Stay away from collection calls

 

You might have experienced situations, where collection calls keep on disturbing you throughout the day. When you are in debt, the borrowers transfer the responsibility of collecting the money to other agencies. They call the borrowers frequently and pressurize them to repay the money. The situation is annoying as well as embarrassing. When you take a debt consolation loan from a reputed company, the professionals will not harass you for payments. You simply need to pay a small amount every month.

 

Lower rates of interest

 

One of the best benefits of getting a debt consolidation loan is that you will have to pay a lower rate of interest. Small business owners having multiple credit cards have to pay high rates of interest. When you take a loan for debt consolidation from a reputed financier, you can benefit from the lower rate of interest. In fact, you save a lot of money which you can invest in productive areas.

 

Good credit score

A good credit score enhances your reputation as a borrower. When you take debt consolidation loans from the financer at a low rate of interest, it becomes easy for you to repay the amount in time. It improves your credit score, which ensures that you will be able to get loans easily in future. It builds up your credibility as a borrower, which is of immense value for small business owners.

 

Well, now you know the benefits of debt consolidation loans, you can reach out to a recognized financer around. Most of these private lenders are aware of the situations small business owners have to face. You will find it easy to manage your finances once you approve for the loan.

 

How to Manage a Financial Windfall

There is no better feeling than coming into money you weren’t expecting. Whether it is a check or cash in the form of a gift or you find luck with a winning lottery ticket, knowing how to manage extra cash is important.

Put the Money in Savings

The most obvious thing to do when you come into extra money is to put it in savings. Make sure that you are getting the most of your savings account by comparing interest rates and finding an account with a low-to-no monthly maintenance fee.

Pay Off Debt

Another great thing to do with a financial windfall, whether it be a small amount from a lottery ticket or a sizable inheritance, is pay off debt. If you’ve struggled with debt, you know how crippling it can be. Using a financial windfall to pay off your debt is always a great idea.

Buy Something You’ve Been Meaning to Buy

Maybe you’ve been meaning to fix something in your home, buy yourself some new clothes or get something done on your car. Investing the money back into yourself is never a bad idea. If you have some cash left over after you make your long-awaited purchases, you can always toss it in savings or pay off a little debt.

Consider a Retirement Fund

If you come into a sizable amount of money, you may consider placing it in a 401K or Roth IRA. Most of these types of accounts have a $1,000 initial deposit minimum. However, any cash you put into a retirement fund is not taxed until you withdraw it from the 401K or IRA account.

Nourish Your Current Investments

If you are currently investing money in the stock market, have a retirement account or even own a home, you can use financial windfalls to nourish your investments. Add some more money to your retirement account or finally get the remodel done in the kitchen. Whatever the case may be, taking your windfall and contributing to your current investments is never a bad idea.

Distribute the Money

If you’re having a hard time deciding what you should do with your windfall, you can always distribute it across some of your accounts. For instance, maybe you have some debt you’d like to pay down as well as investments and a retirement account to contribute to. If the windfall is sizable enough, you may be able to distribute the cash across all of your accounts (or accounts you are trying to grow).

Conclusion

Making the decision about what to do with a financial windfall can be difficult. But, no matter how much money you come into, making a solid financial plan for the extra cash is necessary. Oftentimes, individuals who win a lot of money on a lotto ticket or come into an inheritance waste the cash on unnecessary things. Don’t let that happen to you. Have a plan when it comes to how to manage your financial windfall.

Ed Rempel Unpacks the Smith Manoeuvre – How It May Help Risk-Tolerant Investors

According to recent census data, almost two-thirds of Canadians are saving for retirement and are busy contributing to registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs). 65.2 percent of households are engaged in saving for retirement, which is a robust figure when compared with the national household savings rate that recently fell to 4.6 percent.

However, while that mark is encouraging, that still means that more than a third of Canadians are not saving for retirement. Many believe that, while those in the prime of their earning years (ages 35 to 54) and members of the middle class are more easily able to devote resources to retirement planning, the younger members of the workforce do not have the same financial wherewithal–for reasons that range from indebtedness to lower salaries. A rise in housing prices relative to wage growth in large metropolitan areas in Canada has also presented a significant obstacle to young and middle-aged savers.

“Many people who would like to save now have to dedicate money to a large down payment on a house,” explains Ed Rempel, a certified financial planner and chartered professional accountant. “And it’s taking them longer to pay down their mortgages, so they have less time to save for their retirement.  That’s part of the problem.”

Ed Rempel, who runs a financial blog called Unconventional Wisdom, is a leading expert on the Smith Manoeuvre, a process that simultaneously allows homeowners to pay down their mortgages more quickly, while investing for retirement. “The Smith Manoeuvre provides an efficient strategy for homeowners to use the equity in their homes to invest without using their cash flow,” Rempel adds. “It allows people to convert their mortgages into tax-deductible credit lines that they can then use to make investments for their retirement.”

The Smith Manoeuvre may be an efficient investment strategy for those who, as mentioned above, want to start planning for retirement, but who are faced with the prospect of paying down a long-term mortgage before they can devote their resources to retirement investing. The strategy works well for those who have a long-term outlook and a risk-tolerant attitude with respect to their investments.

“The main benefit of the Smith Manoeuvre comes from the long-term compound growth of investments,” Rempel further explains. “You can invest for your future without using your cash flow, you receive tax deductions, and you can pay off your mortgage faster. It’s a great option for investors who are willing to stick with the strategy.”

To implement the Smith Manoeuvre in more general terms, a homeowner must have a readvanceable mortgage, which is a mortgage that’s also linked with a credit line. Rempel has a free Ed’s Mortgage Referral Service on his blog to help homeowners get the best readvanceable mortgage for the Smith Manoeuvre. As a homeowner makes mortgage payments and pays down a portion of the principal, that portion is available as credit in a credit line — he or she then borrows from the credit line to make conservative and tax-efficient investments.

The investment credit line is tax-deductible, so, using the Smith Manoeuvre, the homeowner can receive tax refunds, which can then be used to pay down the mortgage more quickly. The homeowner also borrows from the credit line to pay the interest on the credit line; capitalizing the interest is a key part of the strategy and allows a homeowner to invest without having to resort to using his or her cash flow.

Ed Rempel is the only accountant in Canada working with the Smith Manoeuvre and the only financial planner combining the strategy with comprehensive financial planning. He explained that the Smith Manoeuvre can be a helpful choice for investors who have a time horizon of 20 to 30 years when it comes to their investment portfolio