You’ve finally put a savings plan together.

No more DVD’s and concerts or weekend trips.

Then you open your mail…

 The credit card balance is a little bigger than expected. That weekend trip turned out to be a bit more expensive than planned. It seems you owe some taxes this year? That’s right you took out that mutual fund to buy a computer. Plus that balance is still there on your other credit card.

The room suddenly feels a little bit smaller.

Don’t let the panic set in. Breathe. Re-prioritize your plan. Make the necessary sacrifices. Cancel a few subscriptions. Take out the HD for a couple of months. Well…maybe cancel a few more subscriptions instead. The point is, when new costs come up, or ones you forgot about, you can’t ignore them. They will show up at the worst possible time, and probably a few at the same time.

Sometimes its better to clear out those debt balances first before enacting your savings plan. Its very easy to get caught up in the worry of not saving with every pay check. But it is not worth it to continue to carry debts in order to save. The hole will just grow, but at a slower pace. It is the slow growth that you will not notice until the suprise bills roll in.

Clear balances, get back to square one. Build some savings so when the extra costs due occur, or you decide to spend a few more days at the tropical resort, you won’t be spending the next 6 months worrying every time the mail is delivered.

One of the hardest things to do is control spending while on vacation. I mean, you’re on vacation! Reality does not come into play when on vacation. Well more accurately, reality should come into play so you can keep having vacations. The last thing that should occur is regretting the amazing vacation that happened two weeks ago as you stare at the statement.

Some methods I like to put into practice during a vacation are:

• Only use a credit card for the hotel and modes of transportation. Also for any possible emergencies.
• Put together a food budget. Work out when and how often you plan to eat out. It also doesn’t always have to be the priciest restaurant. Be sure to take advantage of any complimentary meals offered by the hotel.
• Set aside some pure spending money. You’re on vacation, you are allowed to spend. However, you can still plan and budget for it.
• Plan far ahead for a vacation. Begin saving sooner rather than later.

Keeping track of your money while on vacation does not distract from the fun. It will make the time more enjoyable without having to be in denial of the out of control spending that could easily happen. Then upon returning home, all that is left are great memories, not great regret.  

Guest blogger Colin Dodge

On Tuesday, January 19th at noon ET, I will be participating in an online discussion on how to tackle holiday bills and dig your way out of the holiday debt.  Join me in the discussion at globeandmail.com at noon.

Come the holiday season, I can’t help but think about George Bailey of Bedford Falls. Otherwise known as actor Jimmy Stewart, George and his townsfolk have become a staple of Christmas viewing as TV and cable networks air what the American Film Institute has labeled the most inspiring film of all time, “It’s a Wonderful Life”, directed by Frank Capra.

George Bailey offers a life lesson to all of us as a man who gives everything he has to family and friends, only to find that he is threatened with financial ruin; thanks to the dishonesty of Bedford Fall’s sleazy slumlord, Mr. Potter. But as George prepares on Christmas Eve to commit suicide by jumping off a bridge, his guardian angel Clarence Odbody arrives to save the day.

Clarence takes George on a guided tour of a sort of parallel universe. He shows George what life in Bedford Falls would be like had George never been born. It’s a pretty grim picture, because George positively influenced, and for that matter saved, the lives of many. The tour is a real eye-opener for George, and it results in a radical change in his attitude towards life. Brimming with new faith, George returns home only to find that his financial problems have been resolved.

I must say, I have a real soft spot for this film and for the character Clarence Odbody, played wonderfully by Henry Travers. As an “Angel 2nd Class”, Clarence can only move up the angel ranks and earn his wings if he is successful in helping George Bailey. I’ve fancied the thought that all of us here at Credit Canada are like Clarence, earning our wings everyday by helping people who are troubled by the financial problems they are facing.

Christmas can be a particularly difficult time for those encumbered by debt. Gifts and all the costly preparations can be cause for worry and even deep depression, rather than joy and celebration. But at Credit Canada, we stress to all those who are troubled, there is always hope. And that hope comes not only in the practical things that can be done to manage finances and perhaps consolidate debt; it comes in the form of a change in attitude towards money and towards life, much like George Bailey’s transformation.

If there is one thing I can impart to the financially troubled this holiday season, it is that life can be far less burdensome when you step back and look at it from a new perspective. Like George Bailey, you may discover that there are wonders yet to be discovered. Maybe all you have to do is contact a guardian angel.

Now that the holidays are officially over a lot of us are bracing ourselves for the bills we’re going to receive this month. Overall, Canadians did pretty good in terms of spending this year, managing to decrease their spending by about 9%, but you wouldn’t have known it in the days following Christmas. Malls were crowded and people waited in lines outside of stores in the wee hours of the morning, ready to throw that plastic on the counter and take advantage of the sales. Did we forget about all the headlines? Did we forget that we’re in the worst economic downturn of our time?

Canadians still need to curb all of their unnecessary spending that results in over-indebtedness. This means acknowledging the financial reality we each have created for ourselves and stop living in the financial fantasies our spending habits are clearly supporting (case in point, Boxing Week). It’s one thing to buy something you’ve had your eye on for a while when it goes on sale, but if you’re purchasing things you really don’t need just because it’s a deal you’re literally paying for a financial mess in the future. We have to learn to keep track of our monthly spending by developing realistic spending plans that complement our monthly net income, while taking into account our long-term financial goals.

If we’re waiting for a reality check, I’m sure we’ll get one in the mail this month.

Have any of you decided to throw-in the towel yet? Christmas is just two days away and a lot of us are running around trying to finish our last minute shopping and organize the best Christmas dinner ever, all the while staying within our budgets, keeping up with the kids, visiting friends and family, and trying to put in those last holiday hours at work.  Is it just me or does Christmas seem more like a marathon rather than a holiday? They say that the festivities during this time of year are breath-taking, but I think we’re taking that idea a little too literally…I’m out of breath!

Look, I’ve read the articles out there on how to have the ultimate Christmas on a budget, but that kind of an undertaking requires a lot of time and a heck of a lot of planning. For example, one suggestion for our frugal gift-givers is to make your own gifts. That’s a lovely idea but it’s only applicable to those who started planning for the holidays over a month ago. Let’s be honest people, who has time to make crafty gratitude boxes without making them look cheap with just 48 hours till the big day? I know I don’t.

The best advice that I can give, from one fellow hectic-scheduler to another, is to give yourself a minute to breathe, take-in that fresh Christmas spirit (while enjoying some Christmas spirits), and remember that the holidays are about spending time with those you love, having some laughs, and celebrating our good tidings with good company. I know this last year hasn’t been the best in terms of economics, but why not take the last year’s occurrences as a reminder of what the holiday’s are really about.

Oh, and one final note: remember that Tim Horton’s do gift cards! $10 there can mean a week’s worth of morning coffees to someone you love.