by Maurie Backman | Updated July 17, 2021 - First published on Nov. 10, 2020
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Here's how to make the most of the money you won't be spending this winter on travel.
Despite the ongoing pandemic, many people are forging forward with plans to see family this holiday season. But if you're not comfortable going that route -- say, you have health issues, you have family members with health issues, or you just don't like the idea of boarding a crowded airplane during a major health crisis -- you may be opting to stay home instead. And while that's disappointing, the silver lining is that not paying for travel gives you a solid opportunity to put that savings to good use. Here's how.
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It's always smart to have anywhere from three to six months' worth of living expenses available in your savings account for emergencies. That way, if you lose your job or get hit with a costly home or car repair, you won't automatically land in debt. If you'd normally spend a few hundred dollars (or more) to go home for the holidays, you can use that cash to pad your emergency fund and buy yourself more peace of mind. At a time like this, that's not a bad thing.
Credit card debt is problematic for a few reasons. First, the longer you carry it, the more money you'll waste on interest charges. Secondly, too much credit card debt can actually lower your credit score. And too low a score could hurt your chances of getting a mortgage, signing a lease to rent an apartment, or -- in some cases -- landing a job. If you won't be spending money on holiday travel this year, use that savings to chip away at your credit card balance. Or, better yet, see if you can pay it off completely.
Healthier debt, like a personal loan or auto loan, won't hurt your credit score (provided you make all of your payments on time). But it's still debt. If you're not traveling for the holidays, take that money and use it to pay down whatever debt you're carrying. The less time it takes you to pay off a loan, the less interest you'll fork over.
We all have to work to pay the bills, but what if the right tools could make your job just a bit easier? If you're not spending money to travel for the holidays, you might be able to invest in the things you need to make work go more smoothly. You might, for example, buy yourself a desk so you're not forced to stick your laptop on a card table each day. Or, you might buy a more comfortable chair, better lighting for your home office, or larger computer monitor. (Less squinting is always a good thing!)
If your holiday travel plans have been canceled, whether by you or by your family, you may be deeply disappointed. But you can use that money to better your financial picture or make your job more manageable. Knowing you've improved your financial health could really help make a tough situation a little easier this holiday season.
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