Financial Education

Keep your spending on track this holiday season

Military families can access free online spending planner and budgeting tips at HolidaySpendingPlanner.com

By Karen Von Der Bruegge, Chief Marketing Officer for Pioneer Services

In times of economic uncertainty, it's only natural for people to pull back financially and reduce their spending. Even those serving in the military (who are typically more "recession resistant" than the civilian sector) are cutting back, finding new ways to save, and attempting to do more with less.

These strategies will be tested with the holiday season approaching, but with a little budgeting and smart spending, there is no reason you shouldn't be able to get the gifts your family wants—and maybe even have a little left over for yourself.

To help your dollars go farther this holiday season, you can follow a few smart spending tips and utilize the free holiday spending calculator available at www.HolidaySpendingPlanner.com to create a budget, make gift lists, and compare your actual spending to what you had budgeted. And to save money on holiday spending this year, you can follow a few easy tips:

Buy non-profit—Using a thrift store can save you a lot of money, while also funding an organization that provides needed services in your community.

Use cash when possible—To minimize debt and future interest payments, pay cash for as many gifts as you can. This is more easily done through smart budgeting, and the tools at the Holiday Spending Planner website allow you to make a complete holiday budget, compare that budget to your actual spending, and have it all saved and available no matter where you are.

Using credit wisely when needed—Using credit at some point is pretty much unavoidable, but simply reaching for a credit card is not always the best option due to the "minimum payment trap." For example, if you pay just the minimum on your cards each month:

$2,000 at 15 percent interest will take 8+ years to pay off with $847 in total interest.

$4,000 at 15 percent interest will take 10+ years to pay off with $1,756 in total interest.

$6,000 at 15 percent interest will take 12+ years to pay off with $2,665 in total interest.

In short, even a small purchase can turn into a big financial headache, with more than 40 percent of your payments going toward interest over the long run.

An alternative is to use an installment loan, either from a bank, credit union, reputable finance company, or retailer. (Look for retailers that have special financing options for the military.) The advantage is that you know what your monthly payments will be and when they will be paid in full; the disadvantage is that it's not quite as convenient and fast as a credit card.

If you are intent on using a credit card, use the one with the lowest interest rate and longest grace period (the time between your purchase and when they begin charging interest), and try to pay off the balance in full each month.

In the end, there's no need to let a gloomy economic outlook cloud your holiday cheer. Instead, create a good budget—whether on a piece of paper or with the Holiday Spending Planner—and do some smart spending, and your holidays can be plenty bright.

About the author
Karen Von Der Bruegge is the Chief Marketing Officer for Pioneer Services, the Military Banking Division of MidCountry Bank, a company that provides financial services and education exclusively to the military community. She is both a Certified Credit Report Reviewer and Identity Theft Prevention Specialist, oversees an award-winning financial education program, and serves on the board of USA Cares, a non-profit that assists military families.

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