By: Crockett Law
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7 Ways to Avoid Holiday Debt
Budgeting your holiday spending ahead of time is your primary weapon against starting the New Year with a lot of new debt. But realistically, not everyone (especially busy parents) has the time to handle this. It’s almost certain that impulsive buys will find their way into your physical and digital shopping carts.
You might get unexpected gifts from friends, coworkers, or family members, prompting you to feel obliged to return the favor. That’s when those sales and last minute buys look all the more appealing. But these “little” add ons add up. According to MagnifyMoney, the average American’s holiday debt goes up each year:
Here are seven tips to help you avoid accruing debt during and after the holiday season.
- Save up beforehand – Set aside a little holiday money every month and, come November, you’ll have a budget limit set by your savings. That way, you aren’t spending anything you don’t already have. Some community banks and credit unions have holiday savings accounts that will automatically deduct a small amount from your paycheck, building a savings account that accrues interest over the year.
- Ignore irrelevant sales – You’re not saving money if you wouldn’t have bought it in the first place. Avoid the temptation of snatching up sale items as “emergency” gifts for unknown recipients. Come January, they’ll just mean more clutter and more dollars spent.
- Learn your habits – Keep a running tally of every holiday dollar spent. If you find yourself making impulse purchases, note what caused you to succumb to the impulse. Also notice where and when you seem to get the most productive shopping done. Is it better for you to shop in the weekend crowds at the mall, or schedule a half-day at work so you can hit a superstore on a less-crowded weekday morning? Will shopping with a friend help you stick to your budget or make you spend more?
- Schedule your shopping – Long and aimless shopping trips can mean long and aimless receipts. Make a list of stores and schedule a set amount of time to spend in each. Consider cutting your shopping time short in order to allow for lines at the register. Also avoid talking yourself into add-on purchases while waiting in those long lines. Remember, the Internet is also a useful tool, whether you’re researching or actually buying online. You can comparison shop, avoid impulse purchases and save yourself from the mall parking lot.
- Think about it – If you catch yourself making an impulse purchase, stop, put the item back on the shelf, and make yourself think about it for at least ten minutes. If it’s a big-ticket item, you might want to leave the store and give yourself 24 hours to think about budgeting for it. It’s important to keep in mind, however, that small items also add up quickly.
- Remember shopping you’ve already done – Have you ever found a box of stashed presents at the back of your closet during spring-cleaning? If you buy early for the holidays, budget early too – and keep records of everything you’ve got stashed.
- Leave your credit cards at home – Not having the plastic in your wallet means you have to pay for everything with cash, which is a great way to ensure you stay on-point with your budget.