With all the year-end parties, year-end holiday and vacation, gifts and shopping last holiday season, are your finances still on track this New Year? The presents are unwrapped, they might be greatly enjoying their gifts, but you are now scrambling to figure out how to pay inevitable bills. Well, it’s not too late to manage your holiday financial hangover, you’re still in the perfect timing to plan and start saving and avoid overspending and be wiser than what you are last year!
I’ve been there too! In 2014, we spent more as we travelled to Hawaii. During Dec to Jan, it is the peak season in Hawaii so everything was so expensive. Hotels and food are all very expensive. The shop outlets that offers sale and cheap prices made us shop more! But last year, we only travelled within Australia. We realised that we can have just as relaxing holiday as travelling overseas to Fiji and Hawaii. We went to Melbourne and Gold Coast, which was a lot cheaper since flight was cheap and we have family all over Melbourne so we stayed with them. Places like Gold Coast in Australia has awesome sunny weather during Xmas and hotels are beautiful and close to the beach. Scenery is also just as nice overseas. We really save on the flight cost by holidaying in Australia.
I’ll also share my little secret on how to cope up with the spending I did this holiday. The way we cope up is that, we use a spare credit card that we have. This credit card is only used to book the holidays and for spending for holiday season. After booking everything, I start scheduling repayments back into the credit card. Example, I may have booked everything in June, by the time of our Holiday period, I have already paid off the whole credit card. I didn’t mind spreading the payments over a few months period even if it attracts interest because we look at it as the cost of borrowing for our holiday and instead of using our everyday account, this separate credit card really helped me to manage cash flow easier. So when we are on our holidays, the only extra costs are our spending money which I will pay back when we get back from Holiday. This leaves us with only 1 portion of the holiday that we have to worry about.
Another secret is too, ask yourself and keep yourself updated with all your finances. I don’t track every dollar we spend on a monthly basis. But I make sure that once every 6 to 12 months, we go through our finances to note down how much we spend on each aspects of our life, we note down the assets we own, the liabilities we have to have a full snapshot of our current net worth and current spending habit. We do this to give us awareness on where we are at in life with our finances, so we can decide whether to cut down certain spending, or purchase further assets etc.
This year, I don’t have a savings goal, but I put a certain amount per week towards our mortgage. We try to pay down our mortgage as much as possible to save on the unnecessary interest we have to pay the bank. The money we pay towards the mortgage is also withdrawable – we can withdraw the extra money we pay towards our mortgage out when we need. So it is like having a savings too. This year we are investing in our own house, renovating it to make it bigger for our growing family. But this will also increase the value of the house.
To save money, I’m not telling you to get another credit card as your only credit card for holiday seasons but you need to do a budget to find out exactly what your income and expenses are. Identify what expense you can eliminate and figure out how you can make more income. Decide on the amount you want to save and by when, and set up a direct debit where you deposit x amount per week/month to a separate savings account. You must treat savings like paying a bill. You need to pay it with urgency and pay it first before you pay other bills.
On my next blog post, I’ll share my travel adventures last holiday season, so you can also start planning wisely your next holiday vacation!