Budget Burnout

You had a blast throughout December shopping for family and friends, and truly getting into the holiday spirit. You also brought in the New Year's with a bang. By now, you're cleaning up the house of all those excess decorations, and putting them away until next year. Unfortunately, in the coming weeks, those charge card bills will be showing up in your mailbox to remind you just how much fun you had. Those bills will immediately cause you what I call "Budget Burnout," while you try to pay them off, along with the regular monthly bills. There is no need for you to enter what is called "frugal fatigue" if you accept that you're a charge card junky. Instead, you can temporarily change your spending habits and pay off those bills faster than you can blink an eye.  Let me give you a few tips to help you pay off those bills, while maintaining your sanity.

1) Calculate up all your charge card bills and list them on a sheet of paper.
2) Calculate up all your normal monthly bills such as utilities, rent/mortgage, car payment, etc.
3) Calculate up your nonessential expenses such as that latte you have to have in the morning at your local coffee shop, lunch during work, or dinner out because you're running late, etc.
4) Make a list of priority spending needs versus binge spending luxuries

Now that you've done that, it's time to look seriously at those charge card bills. Look to see what the percentage is on that interest. The bills that have high-interest charges on the balance of the bill take priority. Is there a way that you can consolidate that balance into a lower interest charge card? Do you have the ability to write a charge card check to transfer that balance? If so, do it. You'll thank me for it later. If your charge card payment is $50 a month, make that payment but then make an additional payment to be applied toward "principle only" of $25 more. That additional payment will help reduce the amount of the balance that is to be calculated for interest. You can't just make a payment of $25 and have it applied. The charge card company won't do that, they'll apply it to the overall balance that includes the interest. You must direct them to apply to "principle only."  By the way, you can also do this same creative financing on your car payment and mortgage payment too. You will quickly begin to see that balance disappear if you apply toward "principle only," and your interest won't be so high.

Plan ahead for next year, and go see your bank manager and inquire about a Christmas club account. The old-fashioned Christmas club account is a basic savings account that you can't draw on until it's paid out in October; the full balance is paid to you, plus interest. If you spend $500 on Christmas, then your monthly deposit for that balance will only be $50 a month. If you spend more than that, subsequently increase the monthly deposit to compensate for the amount. But seriously, do you need to spend that much each year? This is the question you need to ask yourself. Instead of buying high-ticket gifts do what I do, create memories.

Creating memories is a heartfelt conscience effort to listening with not only your ears, but also your heart. For example, your loved one enjoys going to the theater, but can never find anyone to go with them, or can't afford the tickets. So instead of buying them a sweater and an iPhone because you feel that's what they want from you, listen to what they said, theater tickets and dinner instead. Check out your local community theater, or what about a play in a local major city, find out what's on the schedule the following year, and buy two tickets, or a seasonal pass for both of you. By doing this, you are telling that person that you want to attend these showings with them, whereby spending quality time with them at the same time. Are you getting the idea? It's a gift of yourself, shared with that person. This way, you don't have to spend all that money at once; you can spread it out over the year. I did this with a friend of mine one year, and we saw every play in the DC area throughout that one year; plus had dinner together. It's a memory we still enjoy to this day. One day a month to spend with someone you care about.

Now let's talk about those extra spending items you believe you have to have each month -- latte, lunch out, dinner out, binge shopping items because someone at work mentioned them. All those things are trivial and can be quickly cut out of your monthly budget. What about making your own lunch, your own coffee in the morning, and cooking dinner at home? Don't tell me you don't have the time; you do; you're not managing it properly. Preplan your week's breakfast, lunch and dinner and make a grocery list, grab only what you need (be sure to check your household stock first), then spend one day a week cooking all your meals. You have no excuses; you need to cut back so that you're not paying for Christmas all year long, plus thousands of dollars in unnecessary interest charges.

What you want to ultimately do over this next year is, get out of debt, pay off those charge cards, your car and put a dent into that mortgage bill. If you can, prepay those utilities a bit to help lighten the burden later. How about contacting your utilities to see if they have a budget plan your work with that spreads out your yearly usage and divides it up into a doable monthly payment. You'll save money each month that you can put toward those other bills that need to be paid off.

No matter what you do, you must restructure your monthly outlay and begin to live more frugally. Times are hard all over the world, but it doesn't have to be a negative in your life. Create memories instead of clutter.