After the holidays may come some not-so-jolly days for people who find that they spent and borrowed more than they bargained for.
But this downer can turn out to be a positive experience if it focuses an individual's or family's resolve on managing money and credit more wisely.Certainly, anyone suffering from empty-pocketbook syndrome heading into the new year need not feel alone.
As the pace of the economy picked up in the late stages of 1993, all the statistics indicated that consumers' outgo was expanding more than their income.
"Americans are increasing their spending faster than their earnings are rising, which means they are either spending their savings or going into debt," warned Mid-Continent Agencies Inc., a Rolling Meadows, Ill., debt-collection firm. "Many consumers will wake up with a financial hangover in January."
Among a group of consumers surveyed by American Express who were operating on a holiday budget, 45 percent said they expected to exceed their limits.
"During the holiday season, for most consumers the heart outweighs the wallet," said Frank Skillern, president of the consumer card group at American Express Travel Related Services Co.
But the aftermath of a spending spree can be instructive if it points up ways to avoid the same pain in the future.
"It's always wise to set up a budget and especially so for consumers who need some extra discipline," says the American Bankers Association. "Charging purchases on a credit card doesn't eliminate the need to keep within a budget."
A close look at the state of your finances may make it clear that you need to educate yourself better on money matters. "Financial illiteracy is a critical issue in all social and economic classes," says Richard Wagner, chairman of the Institute of Certified Financial Planners.
Education is clearly helpful, for instance, at a time when many advertisements for financial products declare, or at least imply, that credit cards can't be used without paying interest.
In fact, all interest charges can be avoided on most cards if you pay off the full balance due each month.
"Always pay your credit card bill on time," counsels Bob Bouza, senior vice president at Key Federal Savings Bank in Havre de Grace, Md. "Whenever possible, pay off the entire bill to avoid interest charges. Always try to pay more than the minimum payment, but absolutely make sure you pay at least that amount."
If you do carry a balance from month to month on your card, at least you can shop for a lower-rate card instead of the ones that still impose 18 percent to 21 percent annual interest rates.
For every percent you drop, you save $10 a year in interest on a $1,000 balance, points out the newsletter 100 Highest Yields in North Palm Beach, Fla.
An increased awareness of such things as the full cost of carrying debt may also influence you to steer clear of buy-now, pay-later enticements offered by many merchants.
"Beware of deferred payment plans," says Les Kirschbaum, president of Mid-Continent Agencies. "Many plans carry high interest rates, and finance charges may accrue during the deferred payment period."
No matter what means you use to borrow money, says the ABA, "a general budgeting guideline is that credit obligations - including credit cards, car payments and student or personal loans - should not exceed 10 to 15 percent of take-home pay.
"These credit expenses plus mortgage or rent payments should not exceed 35 percent to 40 percent of gross income."
Ultimately, the cheapest way to finance a holiday season, or any other spending, is to save for it in advance rather than to borrow and then pay for it afterward.
"After all is said and done," says Wagner, "the best advice is old advice - spend less, save more and don't do anything stupid. As always, easier said than done."