Follow these tips to survive the holidays without (too much) financial fallout
Russ Wiles, Arizona Republic
The holidays might be the most wonderful time of the year, as the song goes, but they're also the riskiest season for getting stuck in financial quicksand.
"January and February are our busiest months," said Mike Sullivan, a personal-finance consultant at Take Charge America, a national credit-counseling agency. "That's when people get their holiday bills and realize they can't make the payments."
An estimated 35 million Americans still had debt from last holiday season, according to a WalletHub survey of 1,000 people conducted in October. About one in five expect they will carry a holiday-related credit card balance at least into February.
Keeping a lid on spending is one way Americans can survive the holidays, financially, but it's not the only one. This is also a season of heightened thefts, fire risk and other dangers. Here are some ways to keep money pressures under control in coming weeks:
Understand potential credit damage
It's important to recognize the dangers of too much holiday spending, yet consumers on balance don't expect to pare back much, with the strong economy perhaps giving some people a sense of false confidence. Holiday-season sales could rise 4% over last year, according to the National Retail Federation.
Just be aware that if you become overextended on credit card bills and miss payments, you could face late fees that start at $28 for the first offense and $39 for the second, Sullivan said. Higher interest rates are another possibility, with penalty rates above 30% not uncommon.
Less obvious, a credit-card company might freeze any rewards points you have accumulated for airline travel, cash-back benefits or whatever else. Missing a payment also can result in your credit limit being lowered, which can hinder your access to credit in an emergency.
Should you fall roughly 180 days or more past due, a credit-card company can charge off your account and sell your debt to a collection agency, which can result in harassing phone calls.
"With a charge-off, expect a much more vigorous collection effort than you had previously," Sullivan warned.
Also, failing to pay on time can result in a ding to your credit score, as payment history accounts for a large part of scoring. If you fall behind 30 days or more, it will be reported to credit bureaus. A low score can make it harder to get loans at affordable rates, could drive up costs for utilities and insurance, and perhaps impede your ability to land a job.
Speaking of jobs, if you anticipate money to be tight this holiday season, look into seasonal employment. Working an extra few hours a week might be enough to allow you to pay off all bills and build up some savings. Surveys indicate that around 40% of Americans would have trouble coming up with an extra $1,000 or so for an emergency. A part-time job can make a big difference.
The good news this year is plenty of retailers are seeking part-time help over the holidays amid what is sizing up as a brisk shopping season, at a time when the nation's jobless rate is near historic lows.
At some retailers, employee perks include merchandise discounts. Also, certain part-time jobs could lead to full-time employment later, if that's what you're seeking. The National Retail Federation is projecting at least 530,000 workers will fill temporary jobs this holiday season.
Check your holiday-season liability
The holidays are a time of thefts, fires and other hazards, so it's smart to check your coverage on homeowners or renters insurance policies.
If throwing a party, be mindful of tripping and other hazards facing guests, and be careful to monitor their behavior if you're serving alcohol. You could be held liable, or at least could face a lawsuit, if a person who imbibes too much at your gathering later causes an auto accident, said Robert Passmore, an assistant vice president at the American Property Casualty Insurance Association.
Arranging for a ride-sharing service, or making an extra bedroom available, could be worth the hassle.
Burglaries sometimes arise when friends or relatives are staying at a home, as it can be difficult to keep track of everyone who is coming, going and locking the doors.
Then there's the risk of package thefts from porches. Standard homeowners insurance often covers front-porch package deliveries, but it's still wise to schedule deliveries when you're home or have parcels left in more-secure locations such as a side yard.
Packages stolen from a vehicle would be covered by homeowners or renters insurance, not auto policies, Passmore said.
When hanging holiday lights or decorations, use sturdy ladders rather than chairs, and make sure extension cords and other electrical devices aren't cut or frayed. And as annoying as it can be to change smoke-detector batteries, this is a good time to do it.
If you bring a real Christmas tree into your home, make sure it's placed away from fireplaces and vents, and set the tree in a basin of water to slow it from drying out. If you opt for an artificial tree, buy one labeled as fire-resistant. Minimize the use of candles, which are fire hazards. Put Christmas lights on a timer so they don't run all night.
Assess information defenses
The holiday season also can be a time of heightened fraud because of all the online shopping this time of year. Tips provided by the American Property Casualty Insurance Association range from sticking only with the websites of trusted retailers to installing security software on your computer and avoiding public wireless networks.
More basic tips include changing passwords often (and using lengthy, complex passwords) and not providing Social Security numbers, which are rarely if ever needed for online commerce.
Also, be careful about posting information about travel plans online, as that can alert others that your home is vacant.
"Thieves are often looking for people who are leaving town for the holidays," Passmore said. "When you post your whereabouts on social media, you can inadvertently broadcast that."
This also can be a good time to check out identify-theft insurance, though you already might be covered through a personal homeowners insurance policy. ID-theft insurance won't prevent a data breach but it can help you deal with the paperwork fallout after the fact, Passmore said.
Reach Wiles at russ.wiles@arizonarepublic.com or 602-444-8616
