Don’t Let Holiday Spending End In Bankruptcy

10 Oct Don’t Let Holiday Spending End In Bankruptcy

Halloween is just a few weeks away with Thanksgiving and Christmas quickly following. You are already behind on your bills, how in the world are you going to manage Christmas gifts?!!

First, have a family meeting to discuss your finances. Children understand a lot more than we give them credit for. As a family, make a budget and set a limit of how much you can spend overall. Then set a specific dollar limit for each person’s gift. Shop early to avoid the panic that will set in and cause you to spend more than you planned.

Make a game out of where you can cut expenses to have extra money for the holidays. Create a holiday jar such as a large pickle jar and decorate it. Everytime someone in the family chooses to save their money instead of spending it, the “saved” money goes into the holiday jar. The faster the jar fills, the more the children will want to “save” to fill up the jar. For instance, instead of paying for a school lunch or lunch out at work, take your lunch and put the money you that would have been spent for the meal into the Holiday Jar. Other ways to save would be to drink water instead of purchasing a sofa or buying coffee at Starbucks; rent a movie instead of going to the movie theater; use coupons; shop from a list and don’t deviate; rent a book from the library rather than buying it.

Another tip I have found useful is if I see something at the store that I “think” I have to have, I will put it in the basket and walk around the store with it. By the time I am ready to check out, I usually find that I really didn’t want it to begin with or I find something else I want more.

The biggest tip I can offer is – leave the credit cards at home. If you use your cards, especially if you are already having trouble making ends meet, you may find yourself in even bigger trouble after the holidays. Many people use their credit cards during the holidays only to find that filing for bankruptcy may not be a viable alternative when the bills start coming in. Consumer debts totaling $500.00 or more to a single creditor for “luxury goods or services” within 90 days prior to filing are presumed to be nondischargeable. Luxury goods or services does not include goods or services reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor. This is not to say you can’t file for bankruptcy – only that your options may be more limited.

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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.
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