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The holiday season is fast approaching. Are you prepared? Halloween, Thanksgiving, and Christmas all come in quick succession, and depending on how you celebrate these holidays, your holiday spending can really add up! Here we’ll be focusing on the most expensive holiday of the year – Christmas – but it’s still important to remember that elaborate Halloween parties and Thanksgiving travel expenses can also affect your finances this holiday season.
The key to staying out of debt this holiday season is to plan ahead. Many people opt to save money all year just for the holidays. If you haven’t done that this year, don’t fret. You may want to figure out a long-term savings plan for next year, but there are still some things you can do this year to get your finances on track in time for holiday spending.
In 2017, Americans spent more than $900, on average, for the winter holidays, and many put that much and more on a credit card. That means they started 2018 with credit card debt they were hoping to pay off, but we all know how that can go. It’s so easy to get in over your head with debt, and holiday debt is definitely one of the most common ways we do that. And don’t forget about those high credit card interest charges and fees that can have you spending thousands more than you originally intended!
Don’t make financial mistakes that will have you playing catch up in the New Year. Instead, follow these 10 Smart Ways to Avoid Debt This Holiday Season, so you can reduce financial stress and focus on what’s important this holiday season.
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The True Meaning of the Season
Try to remember the true meaning of the season. It can be really easy to get carried away spending money on your family and friends. You want to show them how much you care, but you can definitely do that and still be smart with your money. If you just don’t have money to spend on gifts this season, communicate your circumstances to the people you usually buy for. Spending time with the people you love and care about is what’s most important. So go to those holiday dinners and parties your friends and family are throwing, and give the gift of your good company because that’s more than enough!
Top 10 Ways to Avoid Debt This Holiday Season
1. MAKE A BUDGET
Take an inventory of all of your expenses this holiday season, and decide how much you can comfortably spend without going into debt. Make sure you’re figuring in everything – travel, food, alcohol, gifts, work celebrations, gift wrapping essentials, stamps and holiday cards, decorations. Many people just focus on the money they spend on gift giving, but the little things really add up, too!
2. SAVE MONEY AHEAD OF TIME
One way to ensure you have enough money for the holiday season is to prepare ahead of time by saving money year round. You should be saving money anyway for your emergency fund, large purchases, retirement, and more, but if you find yourself struggling to cover Christmas expenses year after year, you may want to save money in a dedicated Christmas fund, which you can open at your local bank or online. Allot a certain amount to withdraw automatically from your paycheck, and keep the account out of sight if you think you might be tempted to spend it on something else.
For more painless ways to save money, check out 24 Easy Ways to Trick Yourself into Saving Money.
3. SET A SPENDING LIMIT FOR EACH PERSON
Set a spending limit for each person you’re buying for, and STICK TO IT! Decide what you want to buy, and shop around for sales to get the best price.
4. ONLY SPEND WHAT YOU HAVE
This may seem like a no-brainer, but the figures don’t lie. In addition to charging about $1,000 to their credit cards during the holidays, the average household that has credit card debt holds an average of $15,482, and credit card debt continues to climb every year. Save what you can throughout the year, and only spend what you have in that account. You may not be able to give as extravagantly as you’d like, but you also won’t suffer the financial stress and consequences that can last for years to come.
If you can’t control your spending while using credit and debit cards, consider using cash only. Once you run out, you’re done shopping! Also, make sure you don’t rationalize overspending because you’re expecting a windfall. Did you just start a new side hustle, or are you expecting to get a promotion or inheritance soon? Don’t include any money you don’t have yet in your holiday spending budget because you don’t know for sure what will happen. You could be left saddled with debt you can’t afford to repay.
5. IGNORE YOUR CREDIT CARD LIMIT
Just because your credit card limit is $10,000 doesn’t mean you should rationalize spending money you don’t have. Even $100 put some serious stress on your finances, and what if you keep rationalizing overspending and spiral out of control? Don’t forget that purchases charged on credit cards are subject to interest charges. It’s just not worth it to get yourself in trouble with credit card debt.
Need to get your finances in order? Check out 25 Money Hacks That’ll Make You Financially Fit for Life.
6. DON’T BUY YOURSELF ANYTHING
I know it can be tempting to buy yourself something when you’re already out in the stores and taking advantage of huge holiday sales, but if you’re already worrying about having enough money for the holidays, buying something for yourself is just another unnecessary expense. If you can afford it, you can reward yourself for sticking to your budget this holiday season with a purchase for yourself in the New Year.
7. MAKE YOUR OWN GIFTS
DIY Gifts can be a great way to give meaningful gifts without spending a lot of money. If you think the people on your list won’t like DIY Gifts, you may need to check out these DIY Gifts Anyone Would Love to Receive:
8. SUGGEST ALTERNATIVE WAYS TO CELEBRATE
Getting gifts for everyone on your family and friends list can get super expensive. Instead of getting a gift for everyone in your life, find some alternative – and cheaper – ways to celebrate.
- Do a gift exchange where everyone gives a gift to one person attending your holiday celebration.
- Just buy gifts for the kids.
- For work, instead of doing a white elephant gift exchange, suggest making a joint donation to charity.
In my family, my siblings and I are all grown, and gift giving for the adults can feel pretty pointless when we’re just exchanging gifts we could easily just buy for ourselves – and get exactly what we want. We’ve decided to forego gift exchanges for the adults and just buy gifts for the kids. The best part of the holidays for us is spending time together and playing games, so we’re more than satisfied focusing on that instead of presents.
9. SPREAD OUT PURCHASES
Many people buy gifts for Christmas throughout the year when they find good sales and just stockpile gifts until the holiday. Spreading out your holiday purchases can make it much easier to manage your money.
Spending a little at a time won’t hurt your pocketbook like buying all at once will, and you won’t have to spend as much time shopping during the busy holiday season when your free time is low and the stores are crowded. It also cuts down on impulse purchases because you’re not shopping during the holidays when emotions are high, the stores are decorated, and everything’s encouraging you to spend, spend, spend.
If you’re worried about missing out on holiday sales, take advantage of after-Christmas sales to prepare for next Christmas, buy discontinued items, which come at rock bottom prices no matter what time of the year it is, or keep your eye out for Black Friday sales in the summertime. Amazon just had a Black Friday in July sale with prices even lower than the real shopping holiday!
You can spread out other purchases, as well. Buy non-perishable foods like baking supplies and canned goods early, so you’re not buying hundreds of dollars worth of food all at once. Christmas is a time of giving, and that often means giving to charity. If you like to give to charity during the holiday season, but have some cash flow issues during that time, consider giving at a more convenient time for you. Many charities are forgotten throughout the year, so they’ll appreciate your donation in the off-season.
10. MAKE SOME EXTRA MONEY
Sometimes, even if you’re working full-time, your paycheck may just not be enough. Supplement what you’re bringing in with your day job with one or more of these Easy Side Hustles You Can Start Today.
I hope these Ways to Avoid Debt This Holiday Season will help you break the debt cycle and avoid overspending this Christmas, so you can focus on what’s important this season – spending quality time with friends and family.
I would love to hear from you!
Please let me know what you think of these Super Smart Ways to Avoid Going into Debt for the Holidays in the comments. Do you have anymore helpful finance tips for the holiday season? Please share them below!
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