Three Ways to Avoid Holiday Debt

It is easy to start racking up the debt during the holiday season. There are many demands on our money, such as holiday gifts, special events, travel costs, food, decorations, and other entertaining costs. We often get carried away when we spot the perfect gift or want to make it the best season ever.

avoid holiday debtAs you are planning, cooking and shopping, you might want to use the following strategies to avoid holiday debt.

Start with a Holiday Budget

In order to control holiday spending instead of letting holiday spending control you, you will need to set a budget. Start with an overall budget, a dollar amount that you know that you can pay off by the end of January. Then take that amount and divide it up into all of the buckets that you want to fill: Gifts, Decorating, Entertaining, etc. You will probably want to break it down even more, such as listing dollar amounts next to the individual names of those of whom you are buying gifts.

If there isn’t enough to cover everything, you will need to decide priorities. For example, a less expensive appetizer might allow you to add some money for decorating, or you may decide to drop some causal co-workers from your gift list in order to spend more per present on close friends and family.

Focus on What is Important

In any family, it is usually the kids that count the most at Christmas. Why not talk to extended family and see if you can agree to only buy presents for the kids this year. Another idea is to forgo the usual present exchange and instead do something together as an extended family, such as Christmas Caroling, cookie baking, ice skating, etc. You’ll gain memories while you lose the threat of debt.

Take a few moments at the start of each day to really focus on what is important and what you would like to accomplish for the season. Then adjust spending and expectations to make sure that you continue to focus on the things that are most important to you and your family.

Get Creative

Find ways to reduce your costs by being creative. Can you freshen up old decorations, use coupons and sales for food or give homemade gifts this year? For example, CDs are inexpensive to purchase. Why not create a photo slide show for beloved grandparents or a music CD for a favorite nephew? You can also give gift certificates for services, such as a free car wash, a different plate of muffins each month, baked by you, or the promise to organize someone’s kitchen. Homemade gifts usually have more meaning attached to them in comparison to something that is purchased from the store.