It’s the most wonderful time of the year, so the song says. But, for families all across Arkansas, it may not feel so wonderful. That’s because trying to fit the responsibilities of a holiday season into an already maxed out budget can add even more stress to already stressed out families.

So I’d like to try to offer some suggestions for you to carry into the New Year and start fresh with your budget. To do that, let’s create a hypothetical family and budget and show a few ways this family could tackle their financial situation.

We’ll call our family Chris and Christine Kringle. Chris and Christine both work and have two children; one in school and one in daycare. So they need to pay for childcare and after school care, along with all their other monthly obligations.

For the sake of this example, we’ll stick mostly to average numbers. Keep in mind, this is meant to serve as an illustration of how you can come up with a solution to your monthly budget. This is in no way a step-by-step guide, as your situation may very likely differ from the Kringles’.

The average family income in Little Rock is $60,248, according to DeptofNumbers.com. Based on 2015 tax rates, the Kringles have a monthly aftertax income of $4,344 per month. Their monthly budget includes:

  • Average Little Rock Rent $1,317.50 (Numbeo.com)
  • Car Payments for 2 cars = $700
  • Average Daycare Cost $400
  • LRSD After School CARE Program $185 per month for 5 days of before and after school care (Call CARE at 501-447-1880 for more information)
  • Monthly Utility Bills $115 (electricity, heating, water and garbage from Numbeo.com)
  • Average Cable Bill $99 (Average as of September 2015, courtesy Yahoo Finance)
  • Average Internet $47.50 (for 10 Mbps in LR according to Numbeo.com)
  • Cell phones $200
  • Groceries $500
  • Total Monthly Bills = $3,564

As you can see, the Kringles are on the hook for a little more than $3,500 per month in regular expenses, leaving very little wiggle room to pay off their student loan and credit card debt. A Brookings Institute article from June of 2014 illustrates the average student loan monthly payment per household is $242. Also from 2014, Daily Finance estimates the average household has $7,100 in credit card debt.

The Kringles need to be paying down their credit card and student debt, while providing for their family and trying to put some money away for an emergency fund, their children’s college education and their own retirement. So where do they begin?

Option A

The Kringles call that 1-800 number on their student loan statement and ask about paying bi-monthly instead of once a month. They increase their monthly obligation from $242 once a month, to $125 twice a month, and ask that the excess go to the principle. This will help them stay on budget, and the extra $8 per month will amount to nearly $100 per year applied to pay off that principle sooner. It’s not a lot, but every bit helps.

By going to Bankrate.com, they’re able to use the Credit Card Calculator tool to compare how long it would take them to pay off their balance by paying the minimum payment versus a regular set payment. They decide to pay a fixed $200 every month to get that card paid down, versus the minimum of $177.50 that is due. By paying that fixed amount, they’re able to pay the balance off in 52 months, rather than the 308 months it would take by paying the minimum.

Now the Kringles have $308 per month to put into savings and build an emergency fund to handle those unforeseen expenses.

Option B

The Kringles aren’t satisfied with only $308 per month in excess cash. So, they turn to their budget to find some fat to trim.

Cell-plans.specout.com will allow you to compare pay as you go cell phone plans. By doing some homework, the Kringles decide to forfeit the rat race for the trendiest tech and stick to a simple phone plan for the sake of paying down some debts. Their monthly bill goes from $200 to $90.

By paying only for internet at their home, they eliminate their $99 cable bill and use a streaming device, such as Amazon Fire Stick, Roku or Google Chromecast, and pay $7.99 per month each for Hulu and Netflix to quench their entertainment thirst. TV service now drops to $32.

Those two options have freed up an additional $177 per month, bumping that breathing room up to a more comfortable $485. They decide to dedicate $300 to that emergency fund as they continue to build a little more comfort in handling future financial windfalls. The remaining $185 a month is deposited into their Roth IRAs to allow them to begin building for their retirement.

Option C

There’s one final option for the Kringles to consider. Student loan debt is looked upon more favorably than credit card debt by creditors. If the Kringles plan to buy a house or need to purchase new cars one day, they could help their credit scores by putting more effort into paying off their credit card. In focusing on the credit debt, the Kringles continue to pay their student loans in full and on time to stay in good standing there. They’re simply making more of an effort to pay off the “bad debt.”

For people like the Kringles, a great resource to utilize may very well be a non-profit credit counselor. For those who struggle to formulate a budget, these counseling services can be a great resource to lean on and find help in reaching a starting point. Credit Counseling of Arkansas (1-800-889-4916 / CCoACares.com) and Consumer Credit Counseling Service (HelpingFamilies.org) are two great options serving the state of Arkansas. Both will help formulate a budget and can offer debt consolidation plans where needed.

Like the Kringles, many of us worry about money. Instead of worrying, start solving. If you need help, seek it. There are options out there. With a plan your next holiday season may be less stressful and more wonderful.

Dale Nicholson, III, Financial Advisor, Raymond James & Associates at 100 Morgan Keegan Drive in Little Rock. Opinions expressed are not necessarily those of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC. Information contained was received from sources believed to be reliable, but accuracy is not guaranteed. Websites are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor the following website or its respective sponsors. Raymond James is not responsible for the content of the website or the collection or use of information regarding the website’s users and/or members.