Financial recovery possible after holidays

Allison Remcheck

During the aftermath of the holiday season, many already financially struggling college students may find themselves downright broke.

But with a few simple budgeting tips, this deficit can be slowly earned back and prevented next year.

Keith Lucas, a certified financial planner at Ameriprise in Tallmadge, said budgeting usually isn’t a part of spending for college students – or for adults.

His budgeting plan is straightforward. He said one should determine his or her fixed expenses, or money he or she will have to pay every month, and subtract it from his or her sources of income, including savings. The gap of money left after the fixed expenses are subtracted is money to save or spend.

A non-existent gap between savings and spending usually results in credit card debt, Lucas said. Credit card debt is usually what sends students into a financial struggle after their holiday shopping spree.

In order to pay off credit card debt efficiently, Lucas said to break the amount into reasonable pieces.

“Essentially, if you run up a $400 credit card bill during Christmas, I would make a plan to try to pay it off within the first six months of the year,” he said.

But in general, Lucas said to try to avoid credit card overspending.

“I’m a big fan of debit cards,” he said.

With debit cards, shoppers tend to be more careful about their spending because they are aware the money immediately comes out of their checking accounts, Lucas said.

When purchasing something with a credit card, Lucas recommends to stop to think about the final price you will pay if it is left to gather interest. Lucas said even if something is bought at a discount with a credit card, and a balance is left to gather interest, it will end up costing more than it could have if paid for in cash.

Lucas said students should check in order to keep an eye on their credit scores. The Web site is based on Social Security numbers, and it allows anyone who has credit to access his or her credit score and view all outstanding balances.

Tax refund season comes a couple of months after the holidays, and could seem like an excuse to take another spending spree. When debating about whether to save this money or use it to pay off a credit card bill, Lucas said it is wise to pay off your bills first.

However, budgeting isn’t foreign to all students.

Tom Seiler, a senior computer science major, said he is very tight with his money.

“You could say I live by the skin of my teeth,” he said. “I only buy what’s necessary.”

And during the holidays, his family has figured out a creative way to give gifts without spending any money at all.

“My family has a thing where we offer services to each other if we’re having a hard year,” Seiler said.

The members of his family give coupons for various tasks, such as coupons for computer repair, instead of presents.

Contact features correspondent Allison Remcheck at [email protected].