Credit Card Report
Financial News Made Easy

So you’ve blown your budget buying Christmas gifts for family, friends and even the neighbor’s dog.

That’s little surprise. It’s the American way to spend and spend. In an October survey by BIGresearch and the National Retail Federation, consumers said they planned to shell out an average of $923.36 during the holidays, a modest 4% increase over last year but up a steep 24% since 2003.

The problem is that the trauma of overspending during the holidays can last long after the last of the eggnog has been chugged and the wrapping paper stowed away. It can limit how often you’re able to take trips next year. Or eat out.

That’s why you should repair the damage as quickly as possible. That’s especially true in a shaky economy, with housing prices across the country falling and energy prices surging.

Just in time for 2008, here are 10 tips for getting financially fit.

1. Take stock of the damage

   Check your bank and credit card statements online. Once you find out how well you fared in sticking to your holiday budget — assuming you had one — you can either pat yourself on the back or move quickly to get rid of the debt.

2. Tackle debt

   If you’ve racked up debt, map out a plan to get rid of it as early in the new year as possible, even if that means temporarily taking on a second job or forgoing the Starbucks coffee each day.

3. Track and control spending

   It’ll be hard to whittle down debt if you can’t control spending. Here’s how to get a grip: Write down everything you spend in a month. You might be surprised by how much trips to the beauty salon and beers with friends add up.

4. Set up an emergency fund

   Financial planners suggest you keep three to six months’ worth of expenses in a money market or savings fund.

5. Seek lower credit card rates

   If you have good credit and pay bills on time, you can probably get a lower rate on your credit cards just by asking.

6. Make your money work for you

   This means finding the highest-yielding bank accounts; check rates on www.Bankrate.com. If you’re wedded to your bank, keep your checking account there, but consider moving your savings to another institution. Many Internet banks — such as ING Direct and EmigrantDirect.com — pay higher rates than traditional bricks-and-mortar institutions.

7. Set up automatic transfers to savings

   Doing so makes it easier to save for an emergency fund, your child’s education or your retirement.

8. Protect your credit score

   Pay down your … debt as quickly as possible.

   Payment history accounts for roughly one-third of your credit score.

9. Review your insurance

   One way to save on auto and homeowner’s insurance is to increase your deductible.

10. Save now for next Christmas

    The week or so after Christmas, Cunningham says, is a perfect time to reflect on how much the holiday season actually cost you: factor in not only gifts but also travel expenses, entertaining and shipping costs. This will give you a savings goal for next year.

- Source: USA TODAY, Dec. 27, 2007 — Summarized for you by Credit Card Report.