Five Gifts to Give Yourself in the New Year

The Best Gifts Don't Always Come Wrapped in a Pretty Package

ATLANTA, Dec. 28, 2010 /PRNewswire-USNewswire/ -- The holidays are a wonderful time full of having fun with friends and family and giving gifts to the people we care about. For many consumers, however, the joy of the season will soon be replaced by the stress of paying holiday debt.

"It is easy to get caught up in the excitement of giving during the holidays," said Mechel Glass, director of education for CredAbility, a national nonprofit credit counseling and education organization. "But many overdo a good thing and then struggle to make even minimum payments on their credit cards."

CredAbility advises consumers to top their list of New Year's resolutions with a commitment to improve their financial outlook. To help consumers tackle what can be a stressful time, CredAbility offers the following tips:

1. Know how much you owe. A common mistake is not keeping track of debt. The thinking is that as long as you can keep up with the payments, everything is fine.  However, if circumstances change due to a layoff or other unexpected event, you could find yourself unable to make payments and in immediate financial stress. The only way to understand what you are facing is to have a realistic picture of what you owe. Gather all your credit card statements and other bills and add up the total.

2. Create a spending plan. The easiest way to take control of your money is to set out a plan for how you will spend it. This is not glamorous and can be something of a task, but it gives you the power to decide where your money goes. The plan should be flexible and include monthly expenses such as mortgage or rent, utilities, food, transportation, entertainment, clothing, etc. Make sure your expenses are not more than your income. If they are, go back to the plan and make adjustments.

3. Pay off credit card debt. The average cardholder has about $5,100 in credit card debt (U.S. Census Bureau) and the interest paid on that balance can be $800 or more a year (based on 18% interest rate). This number increases per household when there is more than one cardholder in the house. Just think of what you could do with an extra $75-$150 a month in your budget! Stop charging additional purchases today and make a commitment to yourself that once you have paid off your debt, you will not charge any purchases unless you have a plan in place to pay off the balance in 90 days or less. Sacrifices now will mean less stress and a better financial future.

4. Build a savings cushion.  Once you have paid off your credit card balances, you should begin to build a savings cushion for emergency or unexpected expenses or if you lose your job. Your goal is three to six months of living expenses put aside in a savings account. With this cushion in place, when the refrigerator stops working, your car's transmission gives out or your mother-in-law moves in, you will not have to put those unexpected expenses on a credit card.

5. Develop a strategy for your financial future.  Set aside time at least twice a month to manage your finances including paying bills, balancing your checking account and analyzing your expenses. Begin thinking about, and planning for retirement—consider when you would prefer to retire, how much money you will need to live the lifestyle of your choice and what you need to do now to get there. Establish a retirement fund and contribute to it on a regular basis.

Not sure where to start? If you are feeling overwhelmed, there is help. CredAbility provides confidential budget counseling, money management education, debt management programs and other services to help consumers. Contact CredAbility at 800-251-2227 or online at http://www.CredAbility.org.

About CredAbility

CredAbility is one of the leading nonprofit credit counseling and education agencies in the United States, serving clients in all 50 states plus the District of Columbia, Guam, Puerto Rico and the US Virgin Islands, in both English and Spanish. In addition to providing counseling via telephone and internet, CredAbility operates a network of 31 branch offices across the southeast.

Founded in 1964, CredAbility is a family of Consumer Credit Counseling Service agencies that includes CCCS of Greater Atlanta, CCCS of Central Florida and the Florida Gulf Coast, CCCS of Palm Beach County and the Treasure Coast, CCCS of East Tennessee, CCCS of Jackson (Mississippi) and CCCS of Upstate South Carolina.

The nonprofit agency is accredited by the Council on Accreditation and is a member of the Better Business Bureau and the National Foundation for Credit Counseling (NFCC). Governed by a community-based board of directors, CredAbility is funded by creditors, clients, individual donors and grants from foundations, businesses and government agencies. Service is provided 24/7 by phone at 800.251.2227 and online at www.CredAbility.org

SOURCE CredAbility