It's hot. The laundry room is filled with towels from afternoons at the pool and the current meal plan involves avoiding the oven at all costs. When your days are filled with trying to stay inside your air-conditioned home as much as possible and entertaining children who are home from school, planning for the holiday season seems as unrealistic as expecting that Popsicle you just pulled out of the freezer not to melt in less than a minute.
But now is the perfect time to start reviewing your budget because Santa and his sleigh will be here before you know it. Wondering if there’s anything you can do while wearing flip flops and shorts to make this year less stressful from a financial perspective?
1. Pay off credit card debt from Christmas 2014
Still paying off the Xbox gaming system you bought your kids or your husband's new iPad? If you haven't paid off any debt you accumulated from last Christmas, then that should be your first priority.
"Don't take on any new debt. If you are still paying on credit card bills from last Christmas, don't allow yourself to shop for this year until you have paid for last year," said Gail Cunningham, National Foundation for Credit Counseling vice president for membership and public relations.
Determine how much you owe on your credit cards and look through your budget to find places to cut back. You want to have enough time to save for this Christmas so you aren't paying for Christmas 2015 while buying fireworks next year.
2. Create a budget for all holiday expenses, not just gifts
It may seem odd to grab lemonade and sit down in the air conditioning to make a budget for Christmas, but it is often easier to think rationally when you are not caught up in the holiday hype. Without a budget, you will more than likely overspend. While many people make a budget for presents, they often forget about all of the other expenses that come with the holidays.
"Figure out your estimated expenses for six different categories -- travel, entertaining, clothes, decorations, presents and holiday tips," says Liz Weston, personal finance expert and author of "Deal with Your Debt."
3. Save a little each month
Once you have determined a budget for Christmas, take the amount you need and divide it by four months. Each month (August, September, October and November), put that amount in a separate savings account and come Black Friday, you will have the cash you need to pay for the holidays. If you can't afford to put the amount you need aside each month, and then revise your holiday budget until you find a budget that will allow you to pay cash for your expenses this year.
4. Check your rewards balances and order gift cards
Check the rewards balances on your rewards credit cards, especially those that you don't use often. Weston says that purchasing merchandise isn't usually the best value for rewards points. She says that if you have a small amount left on a card you don't use often, gift cards can be a good solution.
"Gift cards can be great for giving as holiday tips, especially for teachers who aren't supposed to take cash," Weston says. "This is a great time to go ahead and order the cards to beat the rush."
5. Consider getting a new credit card
Think about your anticipated spending and how you might get the most out of your purchases by paying with the right credit card. Need to book flights to go see grandma? Paying with one of the best credit cards for travel rewards may help offset the price of your trip and take advantage of other travel-friendly benefits. Does your holiday shopping list stretch all the way to the North Pole? Consider a cash-back credit card offer that features the best cash-back rates in your top spending categories.
It’s also worth noting that many of the best credit cards feature bonus offers in which you can earn points, miles or cash back if you reach a spending threshold within the first couple months with your credit card, which means proper use of a new card now could yield additional rewards by the time you’re replacing swimsuits for sweaters.