4 Tips for Staying out of Holiday Debt

It’s the most wonderful time of the year – and we hope your wallet can agree to that, too. While it is important to make sure everyone on your list is accounted for this holiday season, this doesn’t mean you need to break the bank. According to a survey from CreditCards.com, “despite a desire to keep their spending in check, 41% of respondents indicated they are willing to incur debt this holiday season.” We don’t believe holiday spending and debt need to go hand in hand. Below we outlined best practices in order to stay out of debt this holiday season.

1. Create a Holiday Budget

Start off your holiday shopping plans with a strict budget in mind. This may seem obvious, but without a budget, you are more likely to overspend. Be specific on who is included in this budget. Beyond family members, are there holiday gatherings you will be attending? Sometimes this list can keep growing, but you should go into the season with an allocation of proper funds. Lacey Cobb, director of advice solutions at Personal Capital, suggests using the 50/20/30 rule: “50% of your earnings go to essentials (like rent, utilities and food), 20% of your earnings go to financial priorities (like emergency savings) and 30% of your earnings go to lifestyle purchases (like entertainment and shopping),” she said.

2. Pay off Credit Card Expenses Immediately

It is easy to assume you can put your presents on a credit card and pay later. But this is exactly how debt grows, and this is certainly not ideal. Start off your New Year’s debt free by staying within budget and paying off expenses immediately. To make sure you don’t acquire holiday debt, another spending practice is to take out cash (if you are shopping in-person). This ensures you will not overspend.

3. Research Your Gifts

Try to be organized as you shop this holiday season. If you find a gift online, we suggest looking around other websites to compare prices, so you will pay the lowest price for your gift. Luckily we live in an age of technology, and this can be done from the comfort of your home. Apps like BuyVia compares prices from major retailers.

Another rule of thumb of online shopping is to buy in bulk and avoid shipping costs. Most websites offer free shipping and/or discounts on bundles and orders over a certain amount. Small charges add up, so this is crucial to incorporate into holiday spending.

4. Get Creative with Gift Giving

Hosting a holiday party? Take the pressure off guests by implementing a fun gift-giving tradition. Secret Santa gift giving limits guests to purchasing a single present. Each guest is assigned one person who they will purchase an item for. Set a budget for how much your guests are allowed to spend on a gift. The fun part of this tradition is that you don’t find out who is giving you a gift until you receive it.

Another fun holiday tradition is a grab bag. Similar to Secret Santa, you must notify each attendee about the budget, and they arrive with a gift. Presents are pulled at random from a bag, which is another creative and interactive way to limit spending pressures around the holidays.

We hope you head into the holiday season confident and excited to celebrate with your loved ones. If you find yourself in credit card debt and need relief, our certified experts are ready to help. Contact us today, and a specialist will reach out as soon as possible.