Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.

Do you want to know what is often the last nail in the coffin for people in financial difficulty trying to avoid bankruptcy?  That one-too-many splurge with the credit cards that goes past the financial point of no return?  Simple.  It is one word: Christmas!  As midwest bankruptcy attorney Rachel Lynn Foley pointed out in her blog recently,

"You could could be dealing with the most rational person on the face of the planet.   . . . They do not argue when you tell them that they must take a peanut butter and jelly sandwich to work everyday in order to reduce spending.  But . . .  do not try and tell [them] that they cannot and should not buy gifts for family members at Christmas time."

We all get caught up in the joy of the holiday season and whip our credit cards out of our wallets when we really shouldn't.  But if you are trying to avoid financial ruin and bankruptcy, and back away from the fiscal cliff, now is the time to act.

So What Do I Do?

I am not saying that you should skip the season altogether and act like Tim Allen and Jamie Lee Curtis in Christmas with the Kranks, but you should start now to plan a more measured response to the retail blitz that is the holiday shopping season.

I am old enough to remember that banking staple, the Christmas Club Account.  Every month throughout the year you would put some money into it and then you would have money in December to buy gifts.

Step One

Yes, I know; it's October.  But there is still a strategy for this year.  The first thing you should do is make a budget for your monthly expenses going forward and stick with it (even past the new year).  In doing so, look to see what you can cut back on to free up money to set aside for gifts.  Maybe you can save money on

Eat in instead of out; brew your own coffee instead of going to Dunkin' or Starbucks; brown bag it to work.  You get the idea!

Step Two

Second, after tightening up your budget, see how much is left over.  That is the money you can put away towards gifts for friends and family. That is also the money that you can afford to spend, too, which is the toughest part!  You really have to scale back on either your list, or how much you spend per person.

Suggest a Pollyanna/Santa Buddy system if you have a large family.  Go for a less expensive or handmade gift.  Also, start shopping earlier than you usually do.  This will give you more time to find an affordable gift that the recipient will enjoy, rather than a last minute panic purchase of something you really cannot afford.

I am not saying that it is going to be easy; but it sure beats that sinking feeling in January when the credit card bills come in and you realize that bankruptcy may be your only way out.

It might be difficult to explain to friends and family, but remember: Those who mind don't matter, and those who matter, don't mind.  You will thank yourself in the new year!

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