5 key ways to avoid holiday debt

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If you aren’t careful, a holiday shopping spree can result in a lot of debt — and the shine of the holiday season really wears off when you’re still dealing with credit card bills and interest payments come spring. So how can you have a great holiday, but skip the debt? We have five tips to keep this year’s holiday celebrations from turning into a big financial burden.

1. Make a budget and stick to it. Take a careful look at your finances and your holiday plans to make a budget that includes gifts, holiday parties and meals, decorations, and any travel expenses. It doesn’t have to be a budget that eschews all credit card spending — but you should decide how much you’re going to spend and figure out how you’ll pay it off before you start making purchases. Having a plan to start with will help keep you from getting into more debt than you can handle.

2. Make a gift list. Now that you know how much you have to spend on gifts, it’s time to make a list of everyone you need to get a gift for and break down how much you can spend on each. This will give you a good guideline for gift planning — and help you stick to the budget you already established. Keeping this list with you, either on your phone or as a printout, will help you remember just what your spending limits are so you can stay inside them.

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3. Don’t be afraid to spend less. No matter what the holiday commercials tell you, gift-giving isn’t a competition and you don’t have to buy the most expensive gift to prove you care. A less expensive gift that suits a person’s taste or a homemade item that has a lot of thought behind it will be appreciated as much as any pricey holiday purchase. Remember your budget and don’t let ads or salespeople talk you into overspending!

4. Be sure to comparison shop. Before you buy anything, you should always take the time to do some comparison shopping. Is the item you’re looking at cheaper at another store? Is there a different brand that offers the same or similar product for less? Is there a promotion, sale, coupon, or price matching offer you could use to get the item for less, at this store or another? A little bit of research can go a long way towards saving some cash. If you’re shopping in-store, smartphone apps are a great resource to let you quickly and easily price check items on the go.

5. Beware of (over)buying for yourself. Treating yourself isn’t a bad thing, but don’t let it bust your budget. Holiday sales are designed to be tempting, but don’t fall into the trap of buying two of everything — one for you, and one to give away. Shopping like that is sure to send your holiday bills out of control — so avoid the temptation!

So long as you take the time to carefully plan your spending in advance, the holidays don’t have to send you into months of credit card debt. So take some advice from Santa this season: make a list and check it twice before you head off to do your holiday shopping.

Posted in: Holiday, PenFed 5, Saving Money
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