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Senior Correspondent

Here Come the Holiday Bills: Now What?

The holiday bills will soon start to pile up. All that spending and giving, partying and enjoying friends and your satisfying retirement was fun, but now the unfun part starts. How are you going to handle all those credit card bills, along with the basics that must be paid, like heat, food, gas and clothes?

The most important message I can communicate in this post is that a financial decision can be short term. That is, some of the ideas I list below may not be necessary for any longer than it takes you to get back on top of the financial mountain. Don't say to yourself, "Oh, I could never live without this or that. They are too important to my happiness."

I'm not here to judge whether that is a legitimate position for you to take. One person's necessity is another person's extravagance. But, too often when we think of cutting back we picture it going on forever. Faced with such a future, we often can't take that step. So, just remember, what you choose to do now doesn't have to be permanent, just long enough to get back to an even keel.

Keep a Budget

This will always be first on my list. Keeping a budget makes a person much more conscious of how money is being spent. Having a monthly limit for each category helps reign in spending. One fail proof method is to put cash into envelopes for each category. When the money is gone, stop spending until next month. If the envelope is empty before several months' end either the amount budgeted must be increased or spending for that expense must be cut back.

I used the envelope method for years until I was comfortable with my budget-setting skills. Today, I use Quicken as my "envelopes." When the amount in a particular category has been spent for that month, I stop.

Cancel Unnecessary Services for Now

Find your newspaper subscription heading into the recycling bin everyday with most of it unread? Do you really enjoy all those magazines each month? Do you find you stream very few Netflix or Hulu Plus movies? Do you find yourself cleaning up after (or before) the cleaning people? Cancel what you can and reassess after the holiday bills are taken care of. You may discover you don't even miss some of those services.

Cut Way Back on Going Out to Eat

We used to allocate almost $250/month to dining out. It was a reward after being on the road many days each month and was one of my family's favorite forms of entertainment. That spending pattern extended into the first year or so of retirement.

Now, the dining out budget is just over $100 a month, enough for 3 to 4 meals out if we are careful and make one of them a lunch instead of dinner. Suddenly, the meal away from home becomes a special treat, something we look forward to. I know couples who spend that much (or more) in an average week. If we did it would cease being special and the money would be wasted.

At a few points in my career our dining out budget was zero. When I was between jobs or things were not going all that well we simply stopped eating in restaurants until the situation improved. It caused no harm and didn't leave us feeling deprived. It was simply a necessary, short-term step.

Coupons and Discounts Are Your Friend

I receive every e-mailed discount coupon offer available: Groupon, Deal Chicken, LivingSocial, Entertainment Daily Deals…some I don't even remember the names of. I delete at least 90 percent of them, but restaurant or vacation deals get used.

Our supermarket lets us "price match." They will match any special price offered by any other supermarket in town, By checking prices on Wednesday we design our shopping list for Thursday and save money. Rarely are national coupons a better deal than the generic house brand, unless there is no substitute. Then, a coupon is used.

Cut Out Starbucks, Dunkin' Donuts, etc.

Is Dunkin' Donuts, Einstein Bagels, or a coffee shop a regular for you? Stop going until you can afford it. Make your coffee at home. Donuts are bad for you, so your body will thank you. Yes, I know Starbucks offers free WiFi, but then so does your home.

Stop Carrying Extra Cash

How does this fit with the suggestion to use cash in envelopes? If there is little or no extra cash in your wallet impulse purchases might be reduced. It is wise to have a few $20 bills tucked away someplace for an emergency cab home or similar problem. But, carrying hundreds of dollars with you makes it much too easy to spend a little here and a little there. If possible use your debit card so the money comes right out of your checking account and you instantly see the purchase on your online account. Or, if you prefer, take the cash from the grocery envelope when you go food shopping.

Remember, you may not need to take all of these steps and none of them need be permanent. After the holiday bills are paid, decide what should be reinstated and what you never really missed.

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