Although it has been billed as “the most wonderful time of the year”, if you spend too much for this season you could set yourself up for a “blue Christmas” and beyond. There are strategies to avoid overspending and all it takes is a little planning and a lot of willpower. Here are five suggestions for avoiding holiday debt
1 Create a budget: Evaluate your monthly expenses and decide how much cash you will have left over for the holidays. Remember that the holidays actually begin at the end of November and run through New Year’s Day. In addition to buying gifts, you should also consider all of the extra expenses associated with travel, hosting friends and relatives, and how many extra meals and get-togethers you’ll be having.
2 Make a list and check it twice: To dodge impulse buying and the bargain hunting frenzy that put us on the path of overspending, it’s best to have your budget and holiday gift list prepared well in advance. Since all the things you buy during this time are actually extras, you should include them all on your list, including greeting cards, wrapping paper, outdoor decorations, and even that little black dress for New Year’s Eve. To keep your list realistic and within your budget, compare prices online, that way you will be a savvy shopper and able to recognize a good deal from a bad one.
3 Save up: Most of us have to cut corners and save up for the extra spending that occurs during the holidays, especially during these recessionary times. The idea of the annual “Christmas bonus” used to be something that many people counted on. However, tough economic times have changed things and now it’s up to the individual to find ways to save extra cash for the holidays.
4 Avoid credit card debt: If you have to use your credit card for a purchase, chances are you can’t afford it. We’ve all been there, envisioning how happy this really big gift is going to make our special someone. We don’t really have the cash for it, but oh come on, ’tis the season. Instead, we should try to envision the finance charges that will roll in by Valentine’s Day.
According to the American Consumer Credit Council (ACCC), the typical United States family spends $935 over the course of the holidays. The ACCC also reports that most Americans have three credit cards and hold $15 799 in annual credit card debt. The holidays come but once a year – imagine how wonderful it would feel to have $15 000 towards a down payment for a home, an extra mortgage payment, or a home improvement project!
5 Keep it simple: Even during the holidays, less is more. Creating a budget and sticking to a list are easier when you look for alternatives to excessive spending from the start of the holiday season. There are hundreds of resources in print and online for ways to be creative and spend less.
Stick to your plan, and unless you are grocery shopping or purchasing a specific item on your gift list, it’s best to avoid stores (including those online!) altogether.