The holidays are almost here. Are you prepared to survive the most expensive season of the year? Americans add an average of $986 to their debt total after the holidays and it takes most people around 5 months to pay back their holiday debt.
Don’t want that to be you? The holiday season can be a fun and exciting time but it doesn’t have to drain your wallet. Here are 7 ways to avoid getting into debt this holiday season.
1. Start Shopping Early
While it feels good to catch a good holiday sale, it also feels great to have all your holiday shopping completed early. Holiday shopping can be stressful and overwhelming for some people.
If you are a big spender, it’s easy to get carried away when shopping and spend more than you need to. There are plenty of pre-holiday sales going on that you can take advantage of so you don’t have to shop last minute.
Some people even pick up gifts all year round to spread out the expenses.
2. Set a Holiday Budget and Stick to It
If you’re trying to avoid getting into debt during the holidays, you should create a holiday budget each year and stick to it. Sit down and plan out how much you can spend this year and some estimated expenses you think you’ll have.
Consider your current income, your regular expenses, and how much extra you can realistically put toward holiday expenses. If you decide to cut some expenses or get a second job or side hustle to help you cover extra holiday expenses be sure to take that into account when setting your budget.
The earlier you do this, the better because with a clear budget in place, you can set the proper amount that you need aside in a savings account so you won’t have to resort to your credit cards.
3. Say No When You Can’t Afford It
When you can’t afford something, don’t be afraid to say no. Some kids will ask for things up until Christmas day but you just have to hold your ground so you can commit to the budget you set.
I’ve also taken rain checks on some holiday gift exchanges which didn’t make me feel so great but I knew I couldn’t afford to spend the extra money.
Sometimes my husband and I get invited to a lot of parties too and we can’t make them all. I always let people know well in advance if we can’t make it and if you don’t want to miss out on any fun, you can throw your own frugal holiday party and ask all your guests to bring a dish to pass.
4. Cash in Any Gift Cards or Rewards
Now is the perfect time to redeem any loyalty rewards, cash back, or gift cards you may have to supplement the costs of the holidays. If you use sites like Swagbucks and Ebates, you can earn points all year-round then cash them in for the holidays.
If you’ve received any gift cards recently, they can help cut some of your out-of-pocket costs as well. I received a gift card earlier this year and for my bridal shower for my wedding and I used both of them to cover the costs of my son’s Christmas gifts this year which was a huge relief for me.
5. Stay Home for the Season
If you’ve traveled for the holidays these past few years, consider staying home this time to save money. Travel can be pricey even if you save up for it and unexpected issues can always arise especially around the holidays and that may increase your expenses.
Instead, you can have a relaxing time at home with your family or even invite out-of-town relatives over and host them if you usually head their way each year.
6. Break Tradition
If you’re really trying to cut back this year, consider breaking tradition and trying something new and frugal. Instead of spending money on costly seasonal events, you can find free or cheap things to do as well like attend a free community event, go sledding, carol around the neighborhood, and ride around your area to look at Christmas lights.
Consider the 3-gift rule with your kids to limit costs (one thing they want, one thing they need, and something to read). Take the kids to the mall to see Santa for free instead of paying for a Breakfast with Santa event. Cook a holiday meal from scratch if it saves money instead of buying already prepared food.
7. Use Your Talents
Giving gifts is just one aspect of the holiday season. If you focus solely on that, you may never truly be happy. Above all, you should focus on spending time with family and giving in other ways like giving your time and talents.
If you can provide a service for a loved one instead of a gift, they would appreciate it and you wouldn’t have to spend money you don’t have. If you are good in the kitchen, you could bake something special for that neighbor who is always helping you out.
If all else fails, put your credit cards away this holiday season if you don’t trust that you won’t overspend and avoid the temptation of applying for any loans.
That’s the worst thing you can do. Set clear expectations with your family and friends and most important, enjoy this time of year with your loved ones.
They don’t want you to feel stressed out about money or get into debt. It’s not worth it.
Some of my own tips:
If you have older kids, wait till AFTER Christmas when stores have drastic sales and those high priced gifts can be 50% off.
Celebrate Christmas on New Years Eve. Share 1 gift on Christmas Eve and wait for New Years Eve. Once again, after Christmas your shopping bill can be 50% less buying the same gifts.
Putting yourself in debt will ruin any happiness from opening presents and cause a depression within that will be with you for months. Do not go in debt, be patient and wait till after Christmas. Having what they want, not when they want it, is more important than going in debt.
Buy presents that will be worthwhile more than 1 hour after opening.