Four Tips for Avoiding Debt During the Holiday Season
It’s the most wonderful time of year! Or so they say. Unfortunately, if you’re impacted by debt, this time of year may not feel so wonderful. The holiday season is notorious for causing even the shrewdest savers to overspend. In fact, according to surveys, shoppers in 2016 took on an average of $1,000 in debt. That’s no small amount for anyone, much less shoppers who are already in debt or struggling to stay out of debt. To save money this year, you don’t have to go full Ebenezer Scrooge. There are plenty of ways to enjoy the season without damaging your finances. Here are our best tips for managing and avoiding debt during the holidays.
Create a special holiday budget before you hit the stores
Before you go gift crazy, look at your budget. After your regular expenses, how much room for extra spending do you have this month? If there is leeway there, how much is there? After looking at your budget, it’s time to get organized. Make a list of every extra thing you need to spend money on this month, then start allocating the extra money in your budget to every item on that list. Itemize your shopping list so you know who you need to buy gifts for and how much you need to spend on each person. The fewer surprises in your spending, the better!
Stick to your list
Before you even think about hitting the sales, make a list of everyone you need to buy a gift for, what you need to buy them and how much you need to spend. Once you get to a store, it can be so easy to get carried away. Before you know it, you’ve bought 12 extra things just because they were on sale, and you now have gifts for your neighbor’s cousin’s dog. This won’t do your budget any favors. Instead, stay focused. Make your list, and don’t deviate. If you can’t find an item on your list, improvise or get creative. But, don’t shop just for the sake of shopping! (Your wallet will thank you!)
You don’t have to spend money to give someone a nice Christmas. In fact, some of the most meaningful gifts are gifts that are personal, not expensive. So, get creative when going through your gift list this year. Handmade gifts are always a thoughtful option. Or, if you’re not feeling crafty, think of a service you could offer to someone. Maybe it’s a home-cooked meal or a few hours of free babysitting. Either way, these types of gifts are often far more memorable than anything tangible you can give, and they’re far less damaging to your finances.
Be kind to your credit cards
Total credit card debt among Americans is already at an all-time high. And, holiday spending typically exacerbates the problem. Unfortunately, putting gifts on your credit cards is only a quick fix. If you can only afford to pay the minimum balance on your card, your holiday debt could be plaguing you for years.
A good solution is to use cash as much as possible. This will help you stay accountable to your budget, and spend within your means. Of course, many of your purchases will likely be online. But, imposing a limit (just like if you’re using cash) can help you stay within your budget.