Information for this article was supplied by the Pennsylvania Credit Union League. It originally appeared in the January 1989 issue of The Northside Chronicle.

Christmas is full of fun, fantasy, and folklore. To keep the cold, harsh reality of holiday bills from destroying your budget and credit rating, the Pennsylvania Credit Union League President Michael Judge has a few tips. Judge cautions consumers to take extra care of their finances after the holidays. The League represents 1,200 Pennsylvania credit unions, nonprofit financial cooperatives that promote wise money management and provide affordable savings, lending investment services to 2.5 million members.

At Christmas and Hanukkah time, people have a tendency to spend more money than their budgets may allow. To prevent post-holiday bill paying blues Judge recommends:

• Start a personal or family budget. With a monthly budget you can accurately cut costs where
necessary and form important savings habits. To begin, map out a three month plan. Include the previous month and the upcoming month—eventually working out an entire year’s budget. List all income and expenses for the month.

• Set aside a portion of savings, even if it is only a few dollars.
Plan to increase your savings “payment” as you can… it serves as an important emergency fund.

• Once you’ve accounted for necessary expenses, such as food, medical and housing, pay as much as possible to each creditor. Keep your personal debt-to-income ratio under 20% of take home pay for installment credit. When you include rent or mortgage payments, the ratio should be no more than 40% of your net pay.

• Prevent a recurrence by setting up a Christmas club account and pay cash next year.
By shopping with cash you can often get the best prices and will save money on credit interest
payments. Most banks and credit unions offer Christmas clubs that will help you save instead
of going into debt over the holidays.

• Some people prefer the safety and convenience of credit cards over cash. Shop
around for the credit card with the most favorable interest rates and terms.

• If you discover your debts exceed your ability to repay them within a reasonable time, meet the problem head on by contacting your creditors and arranging alternate payment plans. Seek financial help from your financial institution or through reputable financial counselors. A bill consolidation loan may be an option if you are sure you will not go over and start overspending again. This type of loan combines all your installments into one lower monthly payment.

“Getting a handle on holiday debt, need not be difficult,” says Judge. “It does require a bit of planning and perseverance.”