Holiday spending could lead some to file for bankruptcy

For many individuals residing in Minneapolis and St. Paul, this is a joyful time of year. The weeks between Thanksgiving and New Year's are filled with social gatherings and celebrations that bring many together. During that period of time it is possible that many people will ignore their finances only to be shocked by the bills that arrive in January. Though some individuals will cover those bills without a problem, for others who have been experiencing financial difficulties, it is the thing that financially sends them over the edge. To avoid this situation there are steps that can be taken.

The first is to plan ahead. While many people are not thinking about the holidays in April or May, starting to save then can leave one in a good position once it is time to start shopping. Even as little as $25 a paycheck will add up over time.

Next, it is a good idea to create a budget. Determining who one needs to buy for as well as how much should be spent is a good way to get started on holiday shopping. Couples should do this together so that both individuals are on the same page financially. This will help not only at holidays but throughout the rest of the year as well.

Individuals should do what they can to avoid using credit cards. While they may seem like a good short-term solution, the reality is that if not paid off promptly, they will result in a greater expense in the long run. Since most people no longer carry around large amounts of cash, a better alternative is a check or debit card that is linked to an account containing the money saved throughout the course of the year.

Come January, there will of course be individuals who as a result of spending habits over the course of time feel that their financial situation is out of control. Though they may feel powerless, these individual should be aware that they do have options. Depending on their circumstances, filing for bankruptcy may be one of them. Matters such as which chapter is appropriate can generally be addressed by a bankruptcy attorney.

Source: Associated Press, "The gift that keeps on giving: Manage holiday season spending to avoid pocketbook strain," Alex Veiga, Dec. 6, 2013

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