How to have a debt-free holiday season
With the holiday season approaching quickly, Americans are coming together to share a common tradition: worrying about having enough cash to get through the festive season.
More than 6 in 10 Americans report feeling at least some stress during the holidays, and finances are the No. 1 cause across all age groups. Sadly, concerns about holiday spending are justified, as a 2016 survey revealed consumers who went into debt for the holidays ended the year owing more than $1,000 to creditors. That's no way to start the new year.
Fortunately, you don't have to spend your holiday season making your credit card issuer a little merrier by giving them more money. You just need to make a plan to spend smarter. Here are a few key tips to help you do just that.
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Make the holiday season a line item in your budget
The holidays arrive at the same time every year, yet for many gift buyers, the spending associated with the holidays seems to come as a surprise.
If you want to avoid going into debt, don't wait until November or December to find the cash for gifts. Instead, make saving for the holidays something you do year-round. If you know you'll spend around $1,000, saving $80 a month means you won't have to reach for the credit cards to play Santa Claus.
This advice may come too late for this year, but you can put it into practice for next season. And, just because you may not have your $1,000 at the ready doesn't mean you shouldn't set a budget for yourself. Before you hit the mall, decide how much you can reasonably afford to spend on the holidays and divide that amount up among all your necessary expenditures. Then, stick to this spending limit and don't go over.
Set a limit on gift prices
If you have a significant other, you may be tempted to go all out on a big gift to show your love. Unfortunately, this can backfire, because debt and money problems are a leading cause of relationship strife.
Instead of buying big extravagant gifts you'll end up paying for over months or years, sit down with your partner and set a reasonable spending limit. This way, you avoid both hard feelings and a big credit card bill.
In fact, it's a good idea whenever you can to set a limit on gift prices for every member of your family or friend group. If no one feels pressure to buy big items, everyone will have a little less to worry about when it comes to funding holiday giving.
Opt for a fun gift exchange
If you've got a big family or friend group, setting price limits on gifts may still leave you spending a fortune. The good news is, you have another option besides buying gifts for every single person on your list. You can suggest something fun like a white elephant gift exchange.
In a white elephant exchange, everyone brings a wrapped gift and sits in a circle with the gifts in the center. A person in the group is chosen at random to go first and select a wrapped gift, and then you go around the circle with the next person in line given the option to either choose a gift from the unclaimed pile or steal a wrapped present already selected by someone in the group. Continue until everyone has had a chance to select or steal a present, then open your surprise gifts.
Gift exchanges like the white elephant -- or a classic Secret Santa exchange -- not only save you money since you only need one present, but they can also be more fun for adults who may not need a lot of stuff but who want to get into the festive spirit.
Offer time instead of things
If you're short on cash, consider offering the gift of time rather than material goods. You could offer to babysit or walk your frazzled friend's dog instead of buying her that sweater that caught your eye, or you could cook a great meal for your parents.
Studies have shown experiences make people happier than material possessions anyway, and your loved ones will have great memories of the time you spent doing something together long after any item you bought would have ended up in a landfill.
Shop bargains and deals
Sometimes, there's no getting around buying gifts for people on your list. If that's the case, you can still save by skipping full-priced items and looking out for special deals.
There's a number of tactics to save on the items you need to buy for the holidays. You can use coupons to cut costs, take advantage of price-matching policies at stores, research pricing online and in store to find the rock-bottom bargains, and hit up thrift stores and consignment stores to find new and nearly new items that your loved ones will love.
One key to holiday shopping is to avoid being fooled by so-called sales that happen on Black Friday and Cyber Monday. Many people assume they'll get the best prices on these days and so don't do the necessary comparison shopping. Unfortunately, while there may be a few good bargains, many deals aren't really deals at all and some of the items with rock-bottom prices are lower-quality products that won't last.
If you'll be shopping the super sales, comparison-shop carefully both to see if the product is really a deal. You'll also want to find out whether the item you're buying is a poorly made derivative available only for the holiday sale, rather than a regular high-quality item sold throughout the year.
The holidays don't have to be the season of debt
With almost half of all Americans stressing about finances over the holidays, the festive season isn't really very festive at all for many. Everyone in your circle is likely to feel better if you can follow these tips to avoid money worries and focus instead on the opportunity to spend some quality time together appreciating all the blessings you already enjoy.
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