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Divorce Settlement in Arizona

Divorce settlement via private mediation is common in some states, where some courts may require couples to settle their problems before contested trial. Arizona is not one of these states. Divorcing couples can directly go to trial without any legal obligation to negotiate via a mediator. But that does not mean divorce settlement is impossible or not worthwhile in Arizona. The state’s family courts are dealing with a massive backlog.   Six or twelve-month backlogs are not uncommon.  Therefore, if you want your divorce case to proceed faster, the settlement might be the best option through private mediation.

There are multiple ways to settle your divorce case with your soon-to-be-ex. The easiest path is to talk to him or her civilly with your divorce attorney in Scottsdale present. You can also hire a third party mediator, with your attorney attending such mediation, to facilitate talks. Divorce mediators are not attorneys, but impartial third-parties who help couples hold discussions. Mediators can help when spouses are not on speaking terms.  You can have your lawyer present, as can your spouse.

Some individuals may refuse to talk to their divorcing spouse and prefer to sort out differences in court. This, however, could be counterproductive to both parties. Here are several reasons why settling a divorce case can be to your advantage:

Save Money

The biggest motivator that drives many divorcing couples to settle via mediation instead of going to trial is the money and expense. Make no mistake, divorce is expensive in Arizona. When an attorney has to represent you at trial, the expenses can pile up because the trial prep is extensive and time-consuming. You will also have to pay documentation fees. Attorney fees and other costs are much lower when you settle.

Save Time

As mentioned above, state divorce courts in Arizona hear so many cases that you should not expect your case to sail through the court without a hitch. Even setting the initial trial date could take months if not a year or more.   If you don’t want the divorce to drag on for years, do consider talking things through and settling through private five-way mediation.

Make Your Priorities Clear

Settling the divorce with your spouse and attorneys is the best way to make your priorities clear. You will have plenty of opportunities to have your say before the final divorce decree is signed. When the case goes before a judge, it is the judge who ultimately gets the final say. The trial won’t go on forever either. The judge is under pressure to conclude the case within a limited amount of time. Therefore, it’s not unlikely that you may not like the judge’s final ruling. It’s possible that the judge may rule in a manner that neither party is satisfied with. It’s usually the case when it comes to decreeing property division and alimony. When you settle, you will have more control over the outcome.  It’s better to choose than to be chosen by a random person in a black robe.

Protect the Children from Unwanted Hostility

Most important, active divorces take the biggest toll on your dependent children. If your divorce involves kids, you do them a disfavor by dragging out a divorce case for years. If you don’t want your children embroiled in a nasty divorce fight, choose to settle with the spouse. Negotiations can also make co-parenting plans more bearable.  Private mediation can get you to the finish line far sooner and with less expense.

If you want the best outcome from your divorce, try to settle your differences and focus on practical issues. Negotiating a settlement civilly is the best case scenario for both parties and for children in most divorces. If you need more information, contact us to discuss options without charge.

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Divorce and Taxes in Arizona

The tax season for 2018 starts on January 29. It can be a particularly stressful time, especially now that the national tax laws have changed. If you are in the middle of a divorce or have recently filed for a divorce, this season’s filings can be quite overwhelming. Here is what you should know about divorce and filing taxes in Arizona so that you don’t make a penalty-incurring mistake:

Divorce Attorney Fees are Not Tax Deductible in General

Clients in divorce cases often want to know if attorney fees are tax deductible. Typically, the answer is no. The IRS does allow a minor exception for divorce attorney fees paid during “collection or production of gross income.” This clause doesn’t cover a majority of fees you would pay a divorce attorney. But you can ask your divorce attorney in Scottsdale whether the fees you pay are tax deductible.

Your Filing Status Determines Tax Liabilities

When you file your IRS form, you are given three options to choose from as your civil status: married, single, or head of household. Tax liabilities for each category slightly differs, so the box you check matters a great deal for your individual tax obligations. If the divorce is not yet final, it can be difficult to determine whether to file as a single person or jointly with your soon-to-be-ex. You can consult with a lawyer to decide what to do. Or you could calculate what you owe under all three categories and determine which is most advantageous to you.

Spousal Support and Child Support are Distinct Categories

When filing your taxes, do not confuse alimony or spousal support with child support. Spousal support, which is sometimes referred to as alimony, is paid by one former spouse to another, for the benefit of the recipient. Child support, on the other hand, is paid to an adult who oversees the well-being of a child, but for the direct benefit of the child.

If you are a custodial parent recipient of child support, you don’t have to list it as taxable income. If you are the parent paying child support, you cannot obtain a tax deduction for the amount paid.

Spousal support works the other way. The individual who receives alimony payment must list it as taxable income. The paying spouse can obtain a tax deduction on the alimony payment. Note that the new GOP tax bill made an important change to this provision that will take effect on December 31, 2018. So it won’t affect this tax season but will start next year. Under the new law, alimony tax deduction is eliminated. The tax obligation is reversed. The spouse that pays the alimony will not be able to report a deduction, while the spouse that receives alimony no longer has to report it as taxable income.

Property Division may be Subject to Tax When Sold

When spouses divide property during a divorce, it is not a taxable act under the IRS Code. However, there’s a hidden clause called “tax basis” that might result in a tax payment. Tax basis is the purchase price of a property that is used to determine capital gains tax. Not all properties, such as a residence, incur capital gains tax following a divorce. However, certain property, such as investments, may incur capital gains tax when sold after a divorce.

For the most part, your divorce decree would determine how taxes should be paid for some property categories, such as IRAs.

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Holidays and Parenting Time in Arizona

The end-of- the-year holiday season is typically the biggest time of the year for many families to get together. If the parents are divorced, the Christmas season could bring forth new disputes. It’s very important to protect children from any sort of drama during the holiday weeks, especially when they expect to spend their school vacation enjoying themselves. In Arizona, the divorce decree usually also includes a separate parenting time plan that lays out who time is shared over the holidays.

Holiday Parenting Time Under Arizona Law

The family courts in Arizona have a statutory requirement for divorcing couples with children to provide a holiday schedule. Under A.R.S. §25-403.02 (C), this plan must include a “practical schedule” for how parenting time is allocated during the holidays. There should be specifications for with whom the child would reside, how the child should be transported, and a reconciliation method in case disputes arise.

Parents should specifically arrange a parenting time plan for the year-end holidays. Unlike other vacation times, the November-December period involves many public holidays, seasonal celebrations, and family gatherings. The child might require transportation more so than during other long holidays like the summer vacation. It’s highly recommended that divorcing parents get family law help in Scottsdale to come up with a reasonable plan.

Organizing a Parenting Time Plan for the Holidays

Very generally speaking, parenting plans during the holidays can be developed in three primary ways. First, some parents agree to have the children for Christmas every other year. For example, mom could have the kids for Christmas and Thanksgiving during even years, and dad during the odd years. Some parents divide holiday time evenly during the day. For example, the kids would spend Christmas mornings with mom and the evenings with dad. Other parents designate certain holidays for themselves. For example, the kids may spend every Thanksgiving with mom and Christmas with dad.

Of course, parenting plans can be adjusted according to different religions and cultures. Adjustments can also be made depending on the vacation time the parent gets. However, it’s very important to have the holiday season planned ahead and in writing. The arrangements are ideally made months in advance unless it’s already specified during the finalization of the divorce. But practical concerns do arise every year, so ex-spouse’s with children should make arrangements early.

Be Specific with the Details

More importantly, divorcing parents must make sure the parenting plan is highly specific. For example, separating parents may decide to give mom the kids for Christmas during even years. But that’s a very basic provision. Is “Christmas” limited to just Christmas day? Will the children require transportation from parent to parent? On which day and at what time will the kids be dropped off and picked up again? These specifics should be handled in the parenting plan.

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How to Handle Debt and Other Financial Problems in 2018

A brand new year is here, bringing with it exciting new possibilities. Some possibilities in 2018, however, will not be exciting for some Arizona households. According to a recent study published by TransUnion, a credit reporting agency, consumer credit card debt will increase this year for the fifth consecutive time. Earlier this year, the amount of credit card debt American households owned reached a whopping $1 trillion. By next year, market research shows that many households would significantly struggle to pay off that debt.

Despite a strong economy, American households continue to amass debt. Credit cards are not the only culprit. A significant number of households are indebted due to unsecured loans like payday loans. This is in addition to typical loans like a home mortgage and student loans. While 2018 may be a good year in economic terms, it will also be a year many Arizonian households and individuals grapple with debt. Here are several debt management tips to keep in mind:

Avoid Taking on New Debt

Remember that any money you borrowed for the holidays will have to be paid off this year. If you are already in debt, it’s not a good idea to take on even more debt. Use your income or savings for holiday activities like parties and vacations and avoid borrowing more money overall. Control your spending habits right now to start reducing your debt gradually this year.

Talk to a Lawyer Regarding a Debt Relief Strategy

If the debts have piled up high already, the creditor may start suing you next year. Therefore, consult with a bankruptcy lawyer in Scottsdale to formulate a strategy to get rid of at least some of that debt. You can consider filing for bankruptcy if you find yourself literally unable to make payments. Chapter 7 bankruptcy allows judges to discharge certain forms of unsecured debt, like credit card debt and payday loans. Ask a lawyer whether filing for bankruptcy would make financial sense in the coming year.

Negotiate with Creditors

If there are creditors calling, demanding that you pay back a loan, there are several options you can consider here. First, if the creditor is abusive and is subjecting you to harassment, you could consider taking legal action against creditor harassment. If the creditor’s communication tactics are legitimate, you can try negotiating. Creditors prefer to have their loans paid back at least partially than to have a bankruptcy court discharge the debt. Therefore, if you are unable to meet due payments, try to negotiate the interest rate or request an extension. Your lawyer may be able to assist.

Last but not least, save for emergencies. The start of the year is a great time to open a new savings account. When you have money saved for tough times, it will eliminate the need to take on personal loans or use expensive credit cards.

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Should You Rush to Get a Divorce before 2019?

There’s been some public speculation in Arizona that couples who want to get a divorce should rush to do so before 2019 rolls around. The reason is the GOP tax bill that has now become law. The new law contains an eyebrow-raising provision that will eliminate the tax deduction for alimony and spousal maintenance.

The Truth about the “Divorce Penalty” in the New GOP Tax Bill

The elimination of the tax deduction for alimony will only go into effect on December 31, 2018. That means couples who divorce before this date can still benefit from the tax deduction. In other words, no, you don’t have to rush to get a divorce before 2019. However, you might want to consider getting a divorce before 2019 to still benefit from the deduction. Seeing that most divorces can take a year or longer to complete, if you are a high net worth or high-income spouse with a long-term marriage and you are considering exiting the marriage, 2018 might be the best time to do it to preserve the tax deductibility of any spousal maintenance you are ordered to pay.

Once the new law goes into effect in 2019, taxpayers in Arizona will not be able to deduct any alimony payments from overall taxable income. Alimony recipients, on the other hand, will not need to report the payment as taxable income anymore. Put another way, spousal maintenance payments will simply be cash out from the payor spouse and cash into the recipient spouse with no impact on either party’s tax returns.

How will the Revised Tax Law Affect Your Divorce Settlement?

It’s important to keep in mind that the new law only affects those who get divorced after New Year’s Eve of 2018. If you are currently in the midst of a divorce negotiating alimony, the new tax law does not need to cause any disputes. Critics of the divorce penalty have argued that the new law would put an excessive financial strain on the ex-spouse that pays alimony or child support. However, these concerns should not affect those who plan to finalize their divorces in 2018.

According to a divorce lawyer in Scottsdale, if divorce settlements are renegotiated after the deduction extension period, the new settlements may be allowed under the tax bill to include language that still allows for the alimony deduction.

Divorcing in 2018 and Beyond

As we push into 2018, it is wise to consult with an attorney to carefully phrase the language in divorce settlements currently being negotiated. There could be additional laws in the future that addresses issues with child support if any arises because of the elimination of the spousal maintenance tax deduction.

In any case, it is not wise to rush a divorce settlement because of a single tax clause. Do consult with your attorneys to makes sure the final settlement is exactly what you need. If children are involved in the divorce, their well-being should be prioritized, as it would be by the courts.

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The Truth about Holiday Season “Bad Credit” Loans

The holiday season is finally over. Among the flurry of deals and discounts consumers typically get when shopping, there are also seemingly lucrative deals for borrowing money. Most consumers use credit cards or otherwise borrow money to spend during the holidays, hoping to pay it all off next year. Not everyone gets their yearly bonus in advance. Arizonians and Americans, in general, have a very complicated relationship with debt. Consumers can be highly unrestrained when it comes to borrowing money. This is why most people still end up with so-called “bad credit” loans that they can’t pay off. Borrowing money when your credit score is already low can send you spiraling straight into a debt trap. Therefore, when you see advertisements for payday loans or bad credit loans, keep the following information in mind:

“Bad Credit” Loans May Come with Sky High-Interest Rates

These bad credit loans are a form of payday loans. Lenders that offer loans like this target borrowers who are ineligible for conventional loans because of existing debt. If a person’s credit score is low, it indicates prior debt problems, and possibly even personal bankruptcy. Legitimate lenders, like banks, do not typically allow people with bad credit to borrow more. Additionally, people with bad credit may have been maxed out of credit cards. So this group of borrowers is desperate and ripe for exploitation.

Loans for borrowers with bad credit are easy to get, but not so easy to pay off. These loans do not typically require collateral but come associated with sky-high interest rates akin to typical payday loans. Unless you pay off one of these loans right away, you may end up with serious debt next year.

What to Do When You Have Too Much Unsecured Debt

If you are nose-deep in debt because of unsecured loans, there are still positives to look forward to. These loans have no associated collateral, so you don’t have to worry about losing a house or a car. If the debt has piled up high and you can no longer afford to pay it all back, then you can consider filing for bankruptcy. Under Chapter 7 bankruptcy law, unsecured debt, including payday loans, can be discharged. Consult a bankruptcy attorney in Scottsdale to know if you are eligible for a Chapter 7 filing.

Bankruptcy is not the only option to consider. Debtors can negotiate with creditors to bring down the interest rate or pay only a part of the loan. If a creditor is verbally abusive towards you demanding payment, you can file a creditor harassment complaint. There are new protections for consumers against loan sharks who mislead borrowers about financial tools like bad credit or payday loans. In these situations, you can find debt relief with legal assistance.

Avoiding Bad Credit Loans in the New Year

You don’t have to file for bankruptcy or hire a lawyer if you are not in debt. Therefore, the best way to avoid being burdened by personal loans in 2018 is not to borrow them in the first place.

If the debt is an issue, don’t borrow more to finance more shopping or vacations. Save money instead. If you are in dire need of credit, consider obtaining a legitimate loan where the interest rate is not so high.

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Why January Sees a Surge in Divorce Filings

The holiday season is in full swing right now. Everyone expects a great start for the New Year, especially families. However, come January, we will also see a rise in divorce filings, according to data from the American Academy of Matrimonial Lawyers (“AAML”). During the months of January in the past several years, AAML data shows between a 25 to 30 percent increase in divorce filings nationwide. This trend isn’t confined to the US either. Researchers have observed it in the UK as well.

In other words, one in five couples gets a divorce in January after the holidays. What could be driving this trend and should married couples be worried? How can family law help in Scottsdale assist in a post-holiday divorce? Read below to find out:

Driving Forces Behind Post-Holiday Divorce Filings

It can be hard to pinpoint exactly one cause for why people file for divorce so soon after the holidays. It could be that most people want to start a new year with a clean slate. If the marriage has been experiencing severe problems in the past year, then it makes sense to start the New Year with a divorce and hope for the best in the future.

The holiday season itself could be a driving force behind the divorce. Families get together for important events like Thanksgiving and Christmas. That means staying together, often with extended family, in the house without that many excuses to leave. Instead of bringing people together, the holidays can also exacerbate problems that drive people toward separation. The holiday time can exert pressure to present a happy face and pretend that everyone in the family is doing fine. It can take a toll on the psyche.   Many spouses see January as their first real time to flee the marriage without doing so during the holiday crush.

The holidays can also make financial problems worse, one of the main reasons behind the divorce. People spend enormous amounts of money shopping for the holidays, throwing holiday parties and enjoying vacations. When the final credit card bill arrives, marital fighting ensues, and the marriage is broken beyond repair come January.

Reasons Not to Rush a Post-Holiday Divorce

Anger and tension can be high when the holidays end. But like all things in life, it can be unwise to rush towards a divorce according to marriage experts and even some divorce lawyers. In states like Arizona, divorce can be expensive and protracted because courts are overwhelmed with so many cases. Besides, Arizona is a community property state, where all assets acquired during the marriage are presumably distributed equally, despite the income levels of each spouse. Contesting such distributions in court can prove costly in time, treasure and emotion.

It’s best to consider alternatives before rushing to separate from a spouse. For example, divorce lawyers in Scottsdale can help you and your spouse mediate differences in marriage. The couple can consider the possibility of divorce and see how assets may be divided before going to court. It’s best to negotiate a separation without contesting everything in a full-fledged litigation. A temporary legal separation is also an option for those who don’t want to divorce, who want to continue to be on each other’s health insurance and other issues.

Instead of rushing to file for a January divorce, think about the end game. What will happen to kids, pets, or elderly dependents? What about finances for the rest of the year and health insurance? Consult a lawyer regarding all of this before going to divorce court.  You can confidentially consult that lawyer in December, January or any other month of the year. Don’t rush—instead be smart, prudent and calculating to maximize your property recovery and your emotional health.

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Prenups are in Higher Demand Among Millennials

Millennials are a lot more likely than their parents to require a prenuptial agreement prior to walking down the aisle. This generation also has fewer qualms about getting a prenuptial than their parents’ generation, according to the latest survey data from the American Academy of Matrimonial Lawyers (“AAML”). The AAML found that more than half of attorneys polled recently said that more millennials have requested prenuptial agreements. Only a small 2 percent of lawyers said that they had seen a decrease in millennial prenups.

A Rising Trend

Unlike their baby boom parents, millennials are less likely to view marriage through rose-colored glasses. Millenials are getting married later in life on average compared to their parents. Not only are millennial soon-to-be-married couples older, they have also had time to accumulate significant assets that they will not want to lose in case of a subsequent divorce.

Interestingly enough, it’s the millennial women who are driving the rising trend among would-be spouses demanding prenups. In the past, a prenup involved an often-wealthy groom asking the bride-to-be to sign an agreement. Prenups were more common among families with money, but now individual wealth can be the deciding factor.  This is particularly true in technology and startup companies where one spouse-to-be has accumulated significant stock and stock options prior to marriage.

What Millennials Want to Protect with Prenups

It was the norm for prenups to once protect inherited wealth. Not anymore, at least not significantly with the millennial generation. What millennials want to protect the most with a prenup is intellectual property, according to Bloomberg. Rather than protecting the family farm against a divorce, millennial spouses want to protect software, apps, songs, films, or screenplays. Interestingly, most of these assets are not even in existence when the couple gets married. What millennials really want is to protect future assets, especially creative ideas, from divorce proceedings.

Millennials included in the AAML survey responded that the most common reason for getting a prenup is the “protection of separate property.” The other two factors that mattered the most were spousal support or alimony and the division of property.

After intellectual property, millennial couples also increasingly include real estate holdings in the agreements. The “millennial prenups” are rather new. However, millennials can specifically request a prenup agreement that includes potential assets from a divorce attorney in Scottsdale.

Taking Stigma Away from Prenups

As millennials start requesting more prenups from their partners, the stigma surrounding such agreements could soon largely disappear. It used to be that couples didn’t want to discuss assets before getting hitched. It’s possible that millennials are learning from the mistakes of their parents, who were more likely to divorce than their own parents. Perhaps getting married later in life makes couples cognizant that not all marriages last a lifetime, but sometimes only a decade, or less.  Moreover, for couples who do not have children, the property disposition during a divorce can be even more important.

However, millennials do not need to worry about divorces like their parents did. The divorce rates are actually in decline nationally. It’s definitely a sign of changing times, or rather, being aware of the facts when getting married.

Many experts do agree that prenuptial agreements in general can be healthy for couples getting married. These agreements can protect individuals against acrimonious and expensive divorce proceedings later in life.  It set’s the couple’s mutual expectations early in the marriage, and no illusions are in place about what happens years later in the event of divorce.

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Pet Custody in Arizona

A beloved cat, dog, or any other animal can be as important as a child to some couples. So it can be heartbreaking to leave a pet with an ex spouse if the couple gets divorced. It should be noted that pets are not considered similar to children under Arizona law, even though they may feel that way.  By law, pets are property.  However, divorcing couples can include pet care concerns in the legal proceedings to give them some consideration under the law.

Legally speaking, pets fall under the category of personal property that can be divided during divorce. But, if the animal in question is separately owned by one of the spouses, then that is an asset that cannot be divided. In other words, the other spouse cannot claim ownership. However, Arizona’s pet custody cases are increasingly being contested because most couples raise animals together, like children.

Determining Pet Ownership During Divorce

There are several factors the court will consider when determining who owns the pet. If the pet was owned by one spouse before the marriage, then ownership is clear, the premarital assets of either spouse remain that way after divorce.  Some consumers have a deep misconception in Arizona that if anyone owns an animal for 6 consecutive days then that person becomes the lawful owner of the animal.  This so-called “6-day rule” is codified at Arizona Revised Statutes Section 11-1001(10). However, the rule exists for animal control purposes, and does not determine final ownership.  Put another way, the 6-day rule has little or nothing to do with which spouse will exit a marriage with the family pet.

Getting Primary Pet Custody

The court will look at evidence to support claims of ownership. What matters here is who the primary caretaker of the animal. If one spouse trained the dog, is responsible for feeding the dog and taking it on daily walks, then that spouse would be the primary caretaker of the animal. When fighting for animal custody, demonstrate how much time and effort you dedicate to taking care of the pet. That’s what matters the most when it comes to ownership.  Judges are like anyone else—they are fair and equitable and should award the pet to the spouse who has that pet’s best interests in mind.

Additionally, the court will consider children’s wellbeing if any pets are involved. If the pet is important for the psychological well-being of the children, then the pet will likely go to the spouse that has primary custody of the children. It happens in most cases, though not all.  Family law litigation, by definition, is unpredictable.

Keep in mind that the court will also consider the financial situation of the spouses when granting pet ownership. If the animal in question requires significant resources to take care of, like a horse, then the spouse will need to demonstrate financial stability to own the animal post-Decree.

Sharing Pet Custody

If the court cannot determine just one owner, or if the separating spouses are willing, pet custody can be shared. In this scenario, the divorcing couple could agree on a pet visitation schedule. A divorce lawyer in Scottsdale can help you draft a reasonable pet parenting schedule.

This “pet parenting time” plans are not the same as child parenting time, which are actively reviewed by the court. But if one spouse neglects the rules in the schedule, such as failing to show up for dog walking time, then that can be used as evidence in court in an ownership battle.

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Managing Money and Avoiding New Debt During the Holiday Season

The holiday season generates months of heavier spending. While it can be reasonable to buy gifts for friends and relatives who visit on Christmas or Thanksgiving, the pressure can be high to spend a lot and buy really nice gifts. This year, American gift-givers will spend an average of $660 on gifts, according to CBS News. Although this number doesn’t seem terribly high, debt among holiday gift givers is on the rise, according to NerdWallet research.

Why Holiday Debt Can Become a Problem

Holiday spenders say that they only plan on spending roughly the same amount as they did the previous year. However, over 50 percent overspend or spend randomly without any sort of budget. Even holiday budgeters end up overspending because people don’t really limit spending during the holiday season. When there are so many “holiday discounts” being offered by retailers, it can be really hard to stop spending because you feel like you are saving money.

What all this spending leads towards is more debt, especially at the start of the New Year. In 2016, a large number of holiday spenders took on debt to finance purchases. The older generations are highly likely to borrow for gifts. Even about 40 percent of millennials borrowed cash to buy gifts during the previous holiday season. All these people then incur debt the following year.

For example, in 2016, about 24 percent of millennials who used credit cards to make purchases had yet to pay off the debt in 2017. Most people take longer than a month to fully pay off credit card debt acquired during holiday seasons.  Every month with a carried credit card balance causes interest, which adds to the debt, and the cycle continues.

Could Holiday Spending Lead to Bankruptcy?

If holiday spenders take on too much debt, especially credit card debt, it could snowball during the following year, leading to possibilities like bankruptcy. Now, a bankruptcy attorney in Scottsdale will advise that not all those in debt are eligible for Chapter 7 bankruptcy, which eliminates most unsecured debt like credit card debt. If credit card debt takes more than four to six months to pay off, the situation could end up becoming problematic.

Holiday spending on credit can pose serious risks to younger buyers in particular. Millennials are still building up credit, which means holiday spending could lead to more ill-advised purchases in the future which then creates a cycle of debt.

Avoiding the Holiday Spending Debt Trap

There are several recommended ways to control holiday spending so consumers do not end up severely overburdened. The first step is making a realistic budget that spenders can reasonably stick to. It’s recommended to keep gift purchases at about 30 percent of the monthly income. However, spenders can give themselves a break and increase the threshold just a bit, but only so as the limit is still at comfortable levels.

Then, avoiding impulsive purchases is the next step. Don’t fall prey to the holiday season advertising. Shop with a list and buy only items you need. Compare prices online to make sure you are not overspending. If it’s a good idea today, it’s a good idea tomorrow.  Don’t rush your spending.

And lastly, pay off credit card debt the following January without holding it off for longer, which will increase the interest fees on the existing debt.  Take your medicine, pay off the card, and tighten the belt in the first quarter each year, if you choose to spend during the holidays.

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