During the holidays, it’s easy to get caught up in the spirit of the season and spend beyond your means. That is especially true this year, since work in the music business – as well as in survival jobs – has been scarce for many. If you have overspent, it’s important to get back on track now by reducing your debt.

Overspending during the holiday season is an issue for many people. Debt has become a way of life in the United States. Half of all households owe at least $7,000 in credit-card debt and pay more than $1,000 per year in interest and fees alone. For compulsive spenders, the holidays provide a good excuse to let loose and really indulge in this addiction. Spending a great deal of time shopping, even if you don’t spend large amounts of money, can be an addictive process. Both shopping and spending take us out of reality and away from our daily concerns and responsibilities. We get a false sense of power from making the purchase. And lately the spending season seems to span from Halloween to Valentine’s Day – a 90-day jag.

Beware of debt triggers: sales, department store credit cards, catalogs and online shopping, and easy credit cards. All of these can quickly lead to serious over-spending.

There are a number of simple, practical, down-to-earth steps you can take to manage your money:

• Try to always pay cash;
• Reinvest your dividends;
• Understand the difference between what you want and what you need;
• Be resourceful.

Try writing down everything you spend for the next month and categorize these expenses under housing, food, clothing, transportation, entertainment, charity, gifts, bad habits, healthcare, and cleaning. Having a written budget is important, since you need to know where your money is spent and, more importantly, where it should be spent.

There are many things you can do to plan your finances. Be sure to balance your checkbook monthly. You will feel genuinely in control when you face up to your finances every month. Keep a calendar of major bills and of the income you have coming in. Rather than spending any unexpected income, put it in a savings account. And if you don’t have a savings account, open one. You can empty your pocket change daily and put it into a savings account. You are not likely to miss it, and you may be surprised to find how quickly it adds up.

If you have a job that pays you a regular paycheck, putting down zero deductions will result in more money being withheld from your paycheck and a bigger tax refund at the end of the year, which you can then put toward your savings. Also, investing in a 401(K) or 403(b) allows you to invest your income without being taxed on that income. It’s very important to put even a small percentage of your income monthly into such investments – although ultimately you should be trying to save a full 20 percent of your income.

Paying down your mortgage can save you a tremendous amount in interest. And with the current low interest rates, it may be very wise to consider refinancing.

Remember that when it comes to managing your debt and actually saving money, slow and steady wins the race. Try getting a job, like substitute teaching, one day a month and put that income toward savings. This can really help change your financial situation.

A good first goal is to have three to six months’ income in a bank account – this will be your safety net in case of an emergency.

You may find it helpful to consult with a certified credit counseling or debt management agency. These nonprofit firms provide expert advice on how to manage your debt. They will help people with extensive debt formulate a debt-management plan. These agencies should provide you with information free of charge.

All of us are bombarded with the message that our value comes from what we buy. Consuming is promoted – these days, almost as an act of patriotism. Fight against that. Your resilience, and what you do with your life circumstances, make you who you are. The sharing of good times is what is truly important, while the gratification you get from spending passes quickly.

Compulsive spending is a way of indulging yourself on the surface as a way of responding to your emotional needs – when you are feeling stressed, lonely, sad, unloved or even celebratory. But such indulging can rob you not only of money but also of the time and energy you need to nurture yourself at your core. It’s also important not to forget that, when you face a credit card bill you can’t pay, you may feel worse than ever – out of control, embarrassed, cheapened. Rather than spending, think about your core needs and how best to meet them. You may decide to take a walk somewhere beautiful or get together with friends. Explore what nurtures you deeply, what increases your sense of fulfillment, self-love and self-worth, and do it more often.

If you would like to talk to a social worker about how you are coping with your finances, contact Local 802’s Musicians’ Assistance Program at (212) 397-4802 to schedule a free appointment.

Sources:

• “Making Your Financial Situation Work for You,” a Networking Meeting presentation given by Mary Landolfi at Local 802 on 5/21/01
• “Five Steps to Getting out of Debt” by Diana Estigarribia in www.ivillage.com/money/life_stage/deepdebt
• “Getting out of the Debt Trap” by Colette Dowling in www.ivillage.com/money/life_stage/deepdebt
• “Spend Less by Nurturing Yourself More” by Olivia Mellan in www.ivillage.com/money/life_stage/deepdebt.