The holiday gift-giving season is bearing down on consumers, staring them in the face like a loaded .44 Magnum.
If you’re one of those shoppers who is able to rein in the impulse to max out your credit at this time of year, you’re lucky. Millions of other shoppers nationwide will incur billions in holiday debt—and likely spend the next year stressing about paying it off and getting their fiscal houses in order.
Celeste Collins feels your pain. She sees it, too, as executive director of OnTrack Financial Education & Counseling (formerly Consumer Credit Counseling Services of WNC).
“We really see an uptick in the amount of consumers coming to us for help,” says Collins. “Some of it is folks who were having trouble before the holidays … and then we also have people who overspent during the holidays and it has added to some of the stress they already felt before the holidays.” Collins tells The Biz that the first quarter of the new year is by far the busiest for the nonprofit counseling service.
“I’d like to say that people who are in financial crisis use restraint during the holidays, but I don’t think that that’s true across the board,” Collins says. “It’s almost like people say, ‘Gosh, everything else is rotten, so I’m going to make sure that my family has a great holiday and I’ll worry about it next year … like they want to create this Norman Rockwell Christmas. But it only makes it worse. One of the things I tell people throughout the year about holiday expenses is that people that love you would not want to think that you have gotten into debt or put yourself in a financially precarious spot just to get them a Christmas present.”
But if you have stretched your credit like taffy, there are some simple steps you can take in 2008 to make your financial life easier. Here are some tips from Collins and the credit-mending folks at OnTrack to help:
Make a New Year’s resolution: Decide on an action you can take to improve your finances in 2008. Checking your credit report is a great step. Another idea is to commit to balancing your checkbook each time you receive a paycheck to ensure that you are not spending more than the amount you make. Determine what you’d like to improve and set some goals.
Keep track of your bills: Designate a filing cabinet or secured box for bills and financial statements. Make separate files for bank statements, tax documents, credit card bills, medical receipts, mortgage statements and other records. Use a calendar to keep track of due dates for bill payments to avoid costly late fees.
Create a monthly budget: Your budget is your spending plan. To create a budget plan, determine your monthly income and recurring expenses like rent or mortgage payments, utility bills, food, transportation costs, tuition, savings, entertainment and personal expenses. Then identify other recurring and periodic expenses like clothing, household appliances and maintenance, gifts, credit card purchases and vacations.
Prioritize your expenses and spending: After writing down your expenses, prioritize each expense based on your needs versus your wants. Set spending limits and determine estimated costs for each expense. If additional funds are left over after all monthly expenses are paid, split the rest of your income between debt reduction and savings. Paying down high-interest credit card bills and loans will save you money over time. Use extra funds to also increase your savings—its good insurance for unplanned emergency expenses. Look for ways to reduce daily spending: For example, take lunch to work more often and go to movies during early matinees instead of evening showings.
Develop a diversified savings plan: Savings should not be limited to retirement planning. It’s important to save for non-monthly expenses like car maintenance, as well as long-term goals such as retirement or purchasing a home. Make regular deposits in an interest-bearing savings or money market account to cover these costs. And be sure to take advantage of employer-sponsored benefit savings, such as retirement accounts, especially those that include an employer match for your contribution such as a 401k. Also, flexible spending accounts can help save for medical costs and, because you are setting aside “pre-tax dollars,” you’ll lower your overall payroll taxes.
Recognize the early warning signs of debt trouble: You may be approaching a debt crisis if you are experiencing these signs: You’re behind on the basics, like January’s mortgage/rent or utilities. You’re using credit to buy items you should be able to buy with cash, such as groceries. You’re skipping some debt payments to make others. You’re receiving overdue notices or telephone calls from bill collectors. Or, more than 20 percent of your take-home pay is being used to pay back credit-card debt.
Don’t suffer in silence, take action and get help: Call your creditors or seek credit counseling through reputable outfits such as OnTrack, a local United Way agency whose wide range of services are mostly free. Don’t be afraid to ask for help. As soon as you know you’re going to have problems, contact your creditors and explain your situation and what you’re doing to meet your debt obligations. Depending on the creditors’ policies and your situation, credit and payment history, you may be able to negotiate your next payment or a lower interest rate. Remember, your creditors would rather keep you as a customer than lose you to bankruptcy or foreclosure.
You can contact OnTrack counselors at 255-5166. For more information on available services, go to www.ontrackwnc.org
• Unemployment rates trend up slightly: Fifty-five North Carolina counties saw an increase in their unemployment rates in October, according to the latest statistics from the state Employment Security Commission. Rates declined in 20 counties and remained the same in 25.
Results were mixed locally: Buncombe and Haywood counties’ rates remained at 3.5 percent, while Madison County saw a tiny unemployment increase from 3.5 to 3.6 percent. Henderson County fared the worst, with a nearly 1 percentage point rise from 3.4 percent in September to 4.3 percent in October. In the Asheville MSA, which constitutes all four counties, the cumulative unemployment rate rose slightly from 3.5 to 3.7 percent.
“Unemployment rates varied across North Carolina in October,” said ESC Chairman Harry E. Payne Jr. in a release. “Since January, however, 85 counties have lower unemployment rates. Since January, we see that employment (not-seasonally adjusted) has increased by 82,390 workers. North Carolina businesses continue to add workers and new job announcements give us hope that this growth will continue.”
Eight metropolitan statistical areas, including Asheville, experienced rate increases and six remained the same. Forty-six counties were at or below the state’s unadjusted rate of 4.6 percent.
• Excellent tastes: Mountain BizWorks held a “Taste of BizWorks” food competition on Dec. 11 at the Haywood Park Hotel. More than 100 Mountain BizWorks supporters sampled delicacies from food ventures owned by Mountain BizWorks members.
Sugo, located at 90 Patton Ave., took home three awards including best appetizer with crostini anatra; best main-course dish with rockfish ceviche; and best of show. Damien Cavicchi owns Sugo and has been a Mountain BizWorks client since 2005.
French Broad Luscious Chocolates took home the best sweets award for their bittersweet chocolate tart. French Broad Luscious Chocolates owners Daniel and Jael Rattigan joined Mountain BizWorks in 2007. They currently sell their selections online at frenchbroadchocolates.com and plan to open French Broad Chocolate Lounge in late December or early January at 10 S. Lexington Ave. in downtown Asheville.
Heinzelmannchen Brewery won in the nonalcoholic beverage category for their old-fashioned draft-style root beer. Heinzelmannchen Brewery, located in downtown Sylva, is owned by Sheryl Rudd and Dieter Kuhn, who have been Mountain BizWorks members since 2004.