Iowans who vowed to hold down their holiday spending may be in for a shock when the credit-card bills arrive. The director of “Consumer Credit of Des Moines” says we forget those spending limits when we’re wielding the plastic, and Tom Coates says that’s why the New Year’s a good time to resolve to write a budget. He advises calculating how much you earn and spend, categorize everything and figure out how much you can pay on credit-card debt, since you’ll need to make far more than the minimum payments to get out of debt. Coates has seen consumers lose track of their debt load and sees how easy it is to do. He says many sit down for the first time when they’re in their forties of fifties, and once they make up a budget and a counselor takes them through their spending and income, “a light goes on” and they realize they’re spending more than they make and that’s why they can’t beat their credit-card debt. Coates says people tend to leave out lots of spending categories when they try to get a handle on their situation. For instance, everybody knows about the mortgage, rent and utilities but may overlook what they spend on maintenance, car-repairs, clothing and, entertainment, and even with a counselor it’ll take time to fill that all in. Coates says once you pay down the credit cards, you should begin putting money into a “house account” or fund to handle sudden car repairs, things that often surprise a consumer and force them to use that credit card. He says based on your spending history, how much you’ve spent in the last year, you should take your spending total and divide it by 12 and — separate from investments and 401-K money — put it into a segregated fund. Coates says Iowans spend more when they use plastic instead of using cash or writing a check to pay for their purchases.
