Oran Hall | Putting debt under manners at year end

Jamaica Gleaner | 2025-12-07 | Original Article

Christmas and the days around it are merry-but-costly days which can potentially bring harm to your financial well-being, even if there is additional income. Truth be told, it does not have to be that way if there is proper planning and discipline...

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Year-end is the time to take stock. It is the time to take stock of your true financial situation by evaluating the strength of your income and the level of your spending against what you projected. It is the time to see what went right and what went wrong, and to take corrective action.

Depending on the results of your evaluation, you may not be able to have a merry time. Rather, your time could be spent working on rehabilitation. This could mean setting a course to reduce debt, perhaps by paying off smaller debts first, or paying off high-interest debt. Perhaps your evaluation may show you the need to reduce spending, or to earn more, or to change your investment strategy. More dramatically, you may have to take a radical approach to the creation of your budget for the next year.

But, let us say your situation allows you to have a life in the festive season. Are there actions you can take to keep you on solid ground?

Ideally, how much you spend in the merry season this year should have already been settled in your budget for the year, with any necessary adjustments being made in cases in which it became necessary to have a supplementary budget. Governments do not have a monopoly on making supplementary budgets.

In fact, your annual budget should have had within it a specific sub-budget for year-end spending, with provision being made periodically for the additional spending you anticipate.

If you count among the fortunate ones who get a bonus or a refund, perhaps the best way to treat such funds is to reduce debt – particularly the high-interest ones, or to invest, or to acquire assets that can add value to you over the long term. Avoid using such funds for short-term satisfaction.

Limit spending with the help of your budget. Stay clear of company that may feed your urge to spend or may tempt you to spend, and stay clear of situations that may entice you to spend.

As for bonuses and commissions you expect to receive, don’t rush to spend what is not yet in your hand. What you expect is not necessarily what you will get – if at all.

Save by buying in bulk to benefit from discounts; joining with family or friends can be helpful. Save by using your membership cards at merchants and with professionals where the benefit is available. Catch the sales and save. Don’t forget to shop around. It is amazing how the prices of the same items vary among merchants. By the way, the prices professionals charge also vary widely. The time it costs to shop by comparing prices can eventually make music to your pocket.

When it comes to food, buy what you need and avoid waste through spoilage. If you join with family and friends to celebrate the season, coordinate well and avoid waste and duplication, lest you lose the benefits of joining forces with others.

If you must have fun, go easy on the entertainment. Join with others. Make your own entertainment, and be price-aware, but take note of what you are getting for your dollar relative to what else is available, before deciding.

Watch that credit card. It is easy to use – far too easy. Think about how you will pay the bill, not just before you tap or insert, but before you commit to spend. Credit card debt is not cheap, and can lead you fast down a slippery slope. If you love to use cards to shop but may have a challenge living within your means, bridle yourself by using your debit card.

Apart from that, resist the temptation to use other forms of debt. They, too, can be dangerous to your financial, physical and emotional health. If you must use debt, it must be because you have determined that you will gain tangible long-term benefits and that you have a credible plan to pay on time.

And, although the merry season is the time to be generous and kind – not that you should not be all year round – don’t feel so sorry for anybody that you borrow money in your name for them, expecting them to service the debt. That is a very serious risk.

When you spend at year-end, bear in mind that there is tomorrow: an immediate tomorrow and a distant tomorrow. Be sober and bear in mind that you can put an effective lid on debt by living within your means. To do so, align spending with income, borrow for productive purposes, borrow only what you can repay, and save systematically to support future spending.

Oran A. Hall, author of Understanding Investments and principal author of The Handbook of Personal Financial Planning, offers personal financial planning advice and counsel.finviser.jm@gmail.com

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