10 Ways to Tidy Up Your Finances Before the Holidays
Summer is over. This fall, fortify your finances to take the end of the year in stride. These helpful tips will get you back on track (and help you stay on track) budget-wise.
1. Start your holiday shopping now
Instead of making a mad rush for last-minute deals, spread out your gift buying over the course of the next couple months. Watch your local circulars and emails for discounts and promo codes, and strike while the proverbial iron seems hot.
For instance, I just purchased several packs of Calvin Klein undies as a Christmas gift for my boo because I received an email for 25 percent off, plus I had an additional 15 percent off coupon with free shipping. Will there be steeper discounts in the near future? I can't be sure, but I had enough savings stacked up to feel like I made a smart choice, and now I can check one more gift off my list.
2. Max out retirement plan contributions
If you haven't already — and your budget can tolerate it — try to max out your 401(k) and 403(b) contributions at work. The employee contribution limit for 2017 is $18,000, and if you haven't reached that, it's time to come as close as you can. Those over age 50 can contribute an additional $6,000 as a catch-up contribution. If your employer offers matching funds, this should be a top financial priority, lest you fail to claim thousands of dollars in free money.
3. Take advantage of layaway
Layaway has had its up and downs over the years. What was once a common practice during the Great Depression started to fall out of favor by the 1980s thanks to the rising popularity of credit cards. Walmart all but left the service for dead in 2006 when it announced it would stop offering it, but by 2012, many retailers were back on the layaway bandwagon to make buying easier on customers in a tumultuous economy. (See also: Is Layaway Still Worth It?)
Personally, I loved layaway in my early 20s when I was on a shoestring budget. It allowed me to plan ahead and make scheduled payments so everything would be ready to go by Christmas. It's certainly a helpful buying tactic to look into if your finances are tight but you still want to participate in gift giving.
3. Use or lose flexible spending dollars
If you're lucky enough to have a flexible spending account through your employer, your FSA may need to be spent by year's end. Try to use up the balance so you're not losing cash. In doing so, you'll free up funds elsewhere that you don't have to use on medical needs.
"Since 2013, your employer may offer one of two carry-over options," says Ryan McPherson, founder of the financial planning firm Intelligent Worth in Atlanta, Georgia. "One — roll up to $500 of unused funds into the following year or two, offer a two-and-a-half month grace period during which you may use your unspent FSA balance. Check with your employer, because offering one of these options is not a requirement. If you don't have either of these carry-over options and expect to have money left in your FSA, try to move appointments and medical/dental-related purchases (i.e., eye glasses or contacts) into 2017."
If you're unsure where your FSA funds apply, IRS publication 502 offers guidance on what counts as a "qualified medical expense." (See also: 8 Ways to Spend Your Last-Minute Health Care FSA Funds)
4. Make a gift list and check it twice
I use to get in this mindset — especially when I started making a little more money — that everybody needed a gift. That logic is false. Everybody doesn't need a gift for the sake of giving them a gift. Now, I make a list of the usual suspects with whom I exchange — immediate family, boyfriend, a few friends — but even then I give it a second glance to see where I can make cuts. Will I see this aunt or that buddy this year? If the answer is no, decide whether a gift is necessary at all to put some more money back in your pocket. (See also: 9 Gifts That Won't Become Clutter)
5. Revise your winter budget
Everything about winter costs more than other times of the year, and you should prepare by revising your budget to make sure all bases are covered.
"In addition to holiday expenses, as the weather gets colder, heating costs also increase," says Roslyn Lash, an accredited financial counselor. "It's imperative that you also set some money aside for inclement weather expenses. Unfortunately, when ice/snow is the forecast, schools typically close, and this could mean paying someone to baby-sit the kiddos. It could also prevent you from going to work, which means lost revenue." (See also: 5 Big Winter Expenses That Could Freeze Your Budget)
6. Determine what's necessary for the holidays and cut back from there
I love all things holiday — the decorations, the parties, the gifts, the endless array of baked goods — and if I'm not participating in someone else's festivities, I'm hosting my own. Of course that can get expensive, so I take a one-year-on, one-year-off approach to the latter part of that equation. Two years ago I hosted a holiday party in my home, but last year I didn't. I bought more holiday decorations for the house last year, but this year I won't. This practice not only helps me save money, but it also lets me cycle through things that I need to get rid of in a timely manner (like half-full bottles of liquor, for instance) and cut down on overall holiday clutter. (See also: Avoid These 5 Common Holiday Budget Pitfalls)
7. Get into a cash back state of mind
Upfront coupons and savings are great, but there's plenty more to be had on the back end if you know where to look. Apps like Ibotta and Fetch Rewards provide cash back on purchases made on preset items or at selected retailers. Last month I scored more than $50 cash back (which was on top of other savings I received on the front end) by shopping through Ibotta.
If you're responsible at managing credit, now's also a great time to take advantage of a cash back credit card on your day to day purchases. By using a cash back card on necessities like groceries or gas, you'll earn cash to bolster your budget. Just be sure to pay off your balance in full every month, or else this method isn't worth it. (See also: 11 Ways Your Credit Card Will Save You Money While Holiday Shopping)
8. Rebid your insurance policies
You may be able to shave some money off your bills this fall by reviewing your insurance coverage.
Michael Landsberg, CFP and founder of Landsberg Bennett Private Wealth Management in Punta Gorda, Florida, recommends rebidding your auto and home insurance policies to at least three independent agents (but not the online ones that are all owned by the same companies).
"Often times, this rebidding process puts hundreds if not thousands back in people's pockets right before the holidays," he explains. "It's very easy. Just take your current policy declaration page and send that to an independent agent and let them do the work. The worst that can happen is you find out you've got a good program in place already."
9. Book travel before demand pricing kicks in
If you're traveling this fall or holiday season, book your mode of transportation and accommodations as soon as possible so you're not looking at ultra expensive rates at the last minute. Hotels and rental cars in particular go fast, and they're subject to on-demand pricing, which means your wallet could end up getting walloped if you're not shut out altogether. (See also: Do These 9 Things Now to Make Holiday Air Travel Easier)
10. Investigate a balance transfer
If you're carrying a high balance on a credit card, now is a great time to give yourself a credit card checkup.
"Explore what's out there," advises Han Chang, co-founder of InvestmentZen. "Many lenders are beginning to offer deals now to get a jump on the holidays. Consolidating credit card debt via a balance transfer can be pretty enticing, especially with those 0 percent introductory APR offers, which usually last for six to 12 months. If you can find a good offer, you could potentially pay down a significant amount of debt before November and December."
But nothing is ever free; offers like this often come with a one-time balance transfer fee ranging from 3 percent to 10 percent of the total balance transfer. That can really add up and, if you're not careful, completely negate any savings that 0 percent APR offers. Be sure to make your payments on time. (See also: Is a Balance Transfer Offer a Good Deal?)
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