Financial Tip of the Week from the Iowa Bankers Association:
Still paying the price from the holiday shopping craze? It's not uncommon to overspend during the holidays and then find yourself trying to get your head above water during the following year. Credit card debt can linger for years if you don't take care of it quickly. Here are some tips to help you start off 2011 on the right foot.
1. Open a holiday savings account. Many banks offer a Christmas Club or holiday savings account program to help customers save for holiday expenses throughout the year. Saving a little money each month will help you avoid facing the same spending crunch in December 2011.
2. Watch your spending. One of the best ways to monitor your spending is to develop a budget. Start by listing your income from all sources. Then list your fixed expenses, such as mortgage payments or rent, car payments and insurance premiums. Next list the expenses that vary, such as entertainment, recreation and clothing. Writing down all your expenses, even those that seem insignificant, is a helpful way to track your spending patterns, identify necessary expenses and prioritize how you spend the rest of your money.
3. Assess your debt. After you've established your budget, you'll be well prepared to pay down your existing debt. When reducing your debt, always continue to make your payments on time. Try to pay more than the minimum due. Generally, it is a good idea to pay off debt with highest interest rates first.
4. Find free fun. Use the month of January to get your budget back on track. Plan to only spend money on necessities, and then commit to finding opportunities for free family fun. Plan a family game night, or check out books and movies from your local library. Your family might also enjoy preparing dinner together or volunteering for a local charity. If you enjoy outdoor fun, winter provides plenty of opportunities for sledding or building a snowman. Use your imagination, and the savings will add up!
These tips are provided by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information, go to www.iowabankers.com.