It’s no secret that you can get into financial trouble at any time of the year – especially if you have a tendency to over-spend, mismanage your money or engage in any number of unwise financial behaviors.
But the end of the year – namely November and December – are particularly high-risk months of the year financially.
It’s during these last two months of the year that you can really hurt yourself economically if you’re not careful.
Here are 4 financial dangers to be aware of during the months of November and December.
1) The Debt Danger
Let’s start with the most obvious year-end danger: overspending.
Right before the holiday season, it’s oh so easy to go into debt. You could go wild buying holiday gifts, decorating your house, or entertaining guests and then before you know it, you’ve spent a few hundred, or even a few thousand dollars.
So be mindful of your budget, even if it seems like everyone else around you has gone spending crazy. And remember: you don’t have to rack up big credit card bills just to enjoy yourself for Thanksgiving, Christmas, Hannukah, Kwanzaa or any other year-end holidays.
2) The Credit Crisis
Ignoring your credit rating in November and December is another surefire way to damage your financial health.
You could hurt your credit in numerous ways during the last two months of the year. For starters, excessive spending on your credit cards will lower your credit score. Additionally, if you decide to take advantage of all those nice department store offers to get 10% off, in exchange for applying for a store credit card, you’ll likewise hurt your credit standing. That’s because each new department generates a hard “inquiry” on your credit report. That inquiry stays on your credit report for two years, and it counts against you, in terms of your FICO credit score calculation, for one year.
You might also hurt your credit during the year end if you’re not cautious about identity theft and protecting your personally sensitive information. So shop online only on secure sites, be sure to leave important documents like your Social Security card at home, and not in your wallet, and keep close tabs on your mailbox, in case crooks try to steal things like new credit cards that come in the mail.
3) The Procrastination Pitfall
If you’re a person who’s always saying: “I’ll get to that later,” your tendency to procrastination may not do you in for most of the year. But it will certainly cost you dearly if you don’t do certain things that absolutely MUST be done in November and December.
For example, November is open enrollment season. On the job, you need to select or change a healthcare plan. Failing to do so could mean you’ll pay hundreds or potentially thousands of dollars in unnecessary medical bills.
4) The Tax Trap
If you want to take advantage of a huge number of tax deductions or tax credits, again, you have to act by the end of the year. Fail to act by the last day of December and you’ll watch those juicy tax perks go up in smoke.
So let’s say you want a tax break for making charitable contributions, selling stock for a tax loss for the year, or making contributions to your 401(k) retirement plan on the job.
These are all things that have to be done by December 31st in order for you to get the financial benefit and save money on your taxes.
These four financial areas show why November and December are the most financially dangerous months of the year. But they don’t have to lead you to financial ruin – if you take action now.