While holiday cheer is in the air, you may be feeling uneasy about the cost of gifts, groceries and everything else that comes with holiday parties and gift exchanges. While it may be tempting to use the holidays as a good excuse to charge things to your credit card - you can do things in a way that avoids going into debt. There are many tips to help you stay on track this holiday season, and avoid the post-holiday stress of suddenly finding yourself in more debt than you can handle.
Many people feel obligated to buy friends and family members expensive gifts that they just can't afford. So, they charge it to their credit card thinking they will be able to pay it off later. However, if you don't foresee an increase in your income anytime soon, or expect a raise after the holidays, be realistic. It's hard to come up with the extra money to pay off credit card debt if you know your income is staying the same, and most of it is spoken for and going to bills and other living expenses. Especially if you already carry debt, it's important that you avoid adding to it. There are ways it can be done while still enjoying the holiday season.
Here are four ways to avoid debt this holiday season:
1) Set a budget and plan ahead of time: Make a list of who you need to get gifts for. Looking at your bank account, determine how much money you will have left for gifts after your usual expenses. Keep some money aside for yourself in case an emergency expense comes up (or if you already have an emergency fund in the form of a savings account, avoid dipping into that for the holiday gifts.) With your budget, determine how much you will be able to spend on each person's gift. If you can't afford to get everyone a gift, try to think of something you could make. Sometimes sentimental gifts like a photo or a letter mean more than a store-bought gift.
2) Avoid store and credit card offers to buy now, pay later: Many stores offer credit cards that make it seem like you can buy anything you want and charge it to the card, and worry about it later. While it may seem that "later" will be a good time to tackle that debt, when it finally comes around, you may find yourself in a tough situation. Only purchase what you can afford at the moment. One of the most common pitfalls into going into credit card debt are the too-good-to-be true offers you receive for no interest for a certain time, or something else that tempts you to apply. However, the catch is if you do not pay off the balance by a certain time, the interest commonly gets charged to the entire balance. You then owe more than you thought you would, making it even tougher to pay off the debt.
3) Shop around for the best prices, do not buy on impulse: Retailers do not make it easy to stick with a plan and budget. With lavish displays of things you may want for yourself or things you'd like to add to gifts for loved ones, it's not easy to walk by without grabbing a few extra things. Keep in mind you have a budget, and when you see these things, remind yourself again. Planning ahead for what you will buy and giving yourself time to find out which retailer, either online or in-store, has the best price, will help you to stick to your list and only purchase the items you intended. With many sales around the holidays, planning ahead and shopping around can allow you to get nice gifts for your loved ones without going into debt.
4) Do not carry your credit cards when you shop, instead bring cash: The best favor you can do for yourself is leave your credit cards at home when shopping around the holidays. Carry cash for the items you've planned to buy. Having a set limit and avoiding the temptation to swipe your card altogether will help you avoid the slippery slope of using your card and putting yourself in debt during the holiday season.
It all comes down to budgeting, planning ahead and giving yourself enough time to shop around. Getting creative may be necessary if your budget is smaller than you'd hoped. Some families will make agreements to set a monetary limit for holiday gifts some years, to avoid the pressure of feeling like you have to buy expensive gifts. The same goes for Secret Santa exchanges with groups. Some families even forego gift giving and instead make something special for loved ones. Doing what works for you and your budget this year will pay off in the long-run when you're not struggling for the coming months or even years to resolve your debt.