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Pay and Benefits

Budget for the Holidays

Don't break the bank this holiday season

Black Friday. The name alone sounds ominous. It seems the department store Christmas decorations come out a little earlier each year. (Some snowflakes and reindeers were even visible before Halloween this time.)

It's no secret the brick-and-mortar and e-commerce retailers love this time of the year. Nostalgia has a way of potentially overtaking the most financially disciplined Sailor.

But, as Cheri Nylen explained, there's a way to enjoy a fulfilling holiday period without breaking the bank. And she should know - she's the Director of Case Work for the Navy and Marine Corps Relief Society.

Step 1: Budget. That's it.

"I'm done with my Christmas shopping," she said. "I budgeted my Christmas in August. I knew what I had to spend and that's all I had to spend."

"Budget," like "Diet" has an inescapable simplicity that must be followed in order for it to work. "You can't spend more than you take in," Nylen said.

Credit Cards

It has never been easier, it seems, for someone to open a line of credit. One doesn't have to look very far to find the latest "cash-back" or "reward points" credit card - all designed to entice the user to spend. This is where things get tricky for the Sailor unfamiliar with solid fiscal discipline. "Sailors work hard for their money," Nylen said. "Using credit costs money that the Sailor doesn't see in the form of interest payments." The bigger the balance carried on the card, the more interest is paid. For example, a balance of $4,000 on a card with a 10 percent interest rate equals $400 ... gone.

There is definitely some psychology at work when it comes to the spending habits of the card-carrying consumer, Nylen explained. "People tend to spend more if they're going to use a credit card instead of cash. Plastic transactions don't seem real."

Debit Vs. Credit

The ease of debit cards (a direct withdrawal from an account) may help curb the temptation of adding more debt to the credit card, right? Not so, said Nylen. "There are very significant differences between whether you pick up your debit card and swipe it or whether you use your credit card and swipe it."

Consumer protections are different for each, she explained. "A credit card offers a lot more safeguards. You can dispute a credit card transaction more successfully than a debit card."

However, neither is healthy if the spender has difficulty staying on a predetermined course (see Step 1 above). "We encourage our clients to keep a spending log," Nylen said. This allows the Sailor to keep track of every hard-earned dollar. "You have to plan for things to happen. Life happens."

Emerging methods of payment

Mobile phone and email-based payment options are putting wallets and traditional cards on the endangered species list. As ease of spending grows, so too does the potential for Sailors to find themselves in bad financial waters. "It's becoming frighteningly easy for our service members to get into serious trouble," Nylen cautioned. "They work hard for their money. They should work equally as hard at ensuring it works hard for them. They need to safeguard it - they need to know where it goes."

Making the Change

It's imperative for Sailors to understand the wealth of assistance provided by the Navy and Marine Corps Relief Society - there's far more to the organization than the financial emergency assistance the name implies. "We can help them set up a spending plan. We can sit and chat - one on one - no command involvement - about what their financial plans are. Help them find some strategies."

Additionally, Sailors have command financial specialists ready to provide the needed guidance, as well as the Fleet and Family Support Center. "There's so many free alternatives that civilians don't have. If they don't take advantages of the free resources available to them, they are throwing away thousands of dollars of services," Nylen said. "We take many phone calls from former service members seeking the free services that were available to them while they were on active duty."

Begin with a visit to www.nmcrs.org or make an appointment to see your command financial specialist.

It's crucial to remember the 'why' when it comes to shopping for the holidays. "Gifts take all shapes and sizes," Nylen said. "Spending time making memories is the most important thing you can do for another person, and that's priceless."

It's not about making big purchases. It's about building lasting memories. And best of all, great memories are free.