Imagine it’s January. You’re taking down holiday decorations, wondering what the new year will bring, and then it hits you, an overwhelming sense of dread as you think about the looming credit card debt from your holiday spending. If this is an all-too-real scenario for you, here are a few tips on how to make it through the season of spending without incurring a load of holiday debt.
1. Set a limit for your holiday spending and stick to it.
Determine how much money you can afford to spend. This will be your holiday budget. If you are someone who uses credit cards to rack up rewards, points, miles, etc., make a vow to stick to this budget number so you can easily pay off the amount due next month.
2. Create a budget based on your own finances.
You may have family members who are in a different place in their financial life. If they typically get you really nice, expensive gift each year, you don’t have to follow suit. Remember, it’s not a competition. Focus on your budget and how you’ll feel in January when you don’t have huge debt to pay off.
3. Cut down on the number of people on your gift list.
Evaluate the people on your gift list and reassess what you will give them. Not everyone needs a gift that’s been purchased. How about baking cookies or creating a DIY project for people outside of your immediate family? You can still spread holiday cheer without breaking your budget.
4. Collect coupons and coupon codes.
Before you shop, search online for discount codes to your favorite stores. Do the same thing with local stores – comb through the coupons you receive in the mail before you head out for holiday shopping trips. For items you know you will purchase as gifts, make sure you comparison shop. You can save $10 to $100 just by keeping your eyes open for deals.
5. Create a better spending habit.
Give yourself a gift that will keep on giving—develop a new and improved spending habit. For every dollar you spend on gifts, find a way to remove that dollar from your regular spending. Be realistic about what you’re willing to sacrifice. For example, reduce the amount of times you dine out, or grab a morning latte. After the holidays, keep it going. You won’t be buying gifts, so you can put that “extra” money in a savings account.
6. Try the “no-spend” challenge.
Make a vow to spend an entire month eating at home from the food stockpiles in your cupboard, pantry and freezer. Look for new recipes that use ingredients you already have. In addition to not eating out, extend the no spending to everything else. Don’t buy clothes, cups of coffee, entertainment, etc.
Not only will you save money, but you’ll develop an awareness of where your money goes and get your overspending under control. Take a walk and read books you have lying around. Take a trip to the library. After you do it once and see how much you’ve saved, you may want to revisit this every year or even more than once a year.
7. Give personalized gifts instead of expensive ones.
Two things are for certain: everyone has at least one creative bone in their body and people love receiving thoughtful gifts. Entertain the thought of creativity over dollars for those on your gift list this year. Take a minute to consider what those on your list could use. For example, if your brother loves to grill, find some DIY rub recipes online for everything from steak to salmon. Purchase inexpensive mason jars from the dollar store, come up with a fun name for the rub, and design a fun label to attach to each jar.
8. Organize group volunteering instead of holiday parties.
You aren’t the only person who struggles with overspending during the holidays. Suggest to your friends that instead of gifting this year, you can organize a group volunteer day. In addition to spending quality time together, you will feel proud of your efforts rather than suffering buyer’s remorse.
The bottom line is to not let debt become dread that weaves its way through your holiday season. Base your gift buying on sentiment rather than dollar value and you’ll avoid a holiday debt hangover.