Budgeting for Christmas in July

With 10-12 paychecks left before the holidays, it’s time to start saving!

Budgeting for Christmas in July is a cool ideaIf you’re like us, you never cease to be amazed at all the retail holidays that American companies make up. Black Friday has become a week-long extravaganza of shopping. Now there’s even Spring Black Friday to shop for your summer kickoff. This month, we have Christmas in July. It’s enough to make your wallet groan with the weight of all that debt.

Truthfully, we’re not really fans of holidays like Christmas in July because they just lead to more unnecessary spending. However, we are fans of the idea that you should start thinking about budgeting for Christmas in July.

You have 10-12 paychecks left to save

If you receive your paychecks on the 1st and 15th of the month, then you have 10 paychecks left before Christmas. For people who get paid bi-weekly, you have 11-12 paychecks left, depending on how your pay schedule falls.

The number one reason most people get into debt at the holidays is that they spend beyond their budget. You want to make those moments merry and bright, so you stop worrying about the bills. When you run out of cash, you pull out credit.

The problem is so prevalent that each year we memorialize holiday debt with an infographic:

Start saving now to avoid the debt of Christmas’ past

If you want to avoid holiday debt this year, you basically have two options – spend less or save more. Starting a holiday saving strategy now can go a long way to ensuring you have the winter season you want. If you can save just $50 out of your 10-12 paychecks, you would have $500-$600 by Christmas.

Spreading the savings out over more paychecks means more money available. It also means less of a burden on your November and December cash flow. You have money saved to cover presents before you ever start shopping. So, you’re less likely to take on high interest rate credit card debt.

What if I charge to earn rewards?

Reward credit cards can be useful. However, those rewards are only rewarding if you start and end a billing cycle with a zero balance. If you start the month with a balance or fail to pay off the balance at the end of month, interest charges apply. The only way to avoid interest is to make purchases on a card that starts at zero, then pay off the balance in-full.

So, if you want to earn holiday rewards, make sure you have zero balance credit cards heading into the season. Otherwise, anything you earn is quickly offset by high interest charges.

Try it out!

  1. Enter your holiday spending from last year in the calculator below.
  2. If you don’t know your APR, set it at 16% – that’s average
  3. If you don’t know your payment schedule, choose 2%
  4. See what happens when you pay more – add $10-$20 to your minimum payment
  5. See what happens with fixed payments – they must be higher than the minimum

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