//How to Avoid Racking Up Debt During the Holidays

How to Avoid Racking Up Debt During the Holidays

The holidays bring a lot of excitement and cheer. But is also a time characterized by a lot of spending. Statistics show that holiday spending goes up every year in the last few years. Unfortunately, holiday expenditure can take a big chunk out of your credit card.

It may feel great while the holidays last but the feeling may not last when you find yourself up to your neck in debt accrued during the holidays. Debt can mess up your life and interfere with your plans especially at the beginning of the year. The question is; can you still enjoy the holidays and still manage to keep off unnecessary debt? Yes indeed! Here are proven ways on how to avoid racking up debt during the holidays.

Avoiding Debt During the Holidays

Work with a Budget

A budget helps you to plan for the available resources and keeps you from doing spontaneous shopping. In your budget, categorize your spending and set money allocation for each item. This can help you have a general figure of the amount that you want to spend and also help you to know where to give more weight. A budget would be worthless if you don’t stick to it; be sure to strictly adhere to it and you will be grateful.

Use Cash to Pay for Expenses

Holiday debts result from credit cards and other loans. Research shows that people who use credit cards for shopping are likely to use many times more money that those that pay cash. There are different ways in which you can put aside some cash for the holiday:

  • Sell stuff that you don’t need in the house. This can be furniture, play gear for kids, electronics, kitchen gadgets etc. As long as they are in good condition and someone can put them into good use, they are better off bringing you some cash.
  • Set up a holiday account early in advance
  • Use your Christmas bonus to boost your expenditure.
  • Cut cost on your normal expenditure to save for the holidays

Adopt Cost Effective Holiday Events

Taking your family for a cruise around the Caribbean Islands and lodging in 5 star hotels is a great idea. However, if you will still be struggling to pay the debt come next year; it is time to re-evaluate your options. You can still have a memorable holiday with your family and friends without necessarily breaking the bank. Here are some cost effective options:

  • Spend time with your family and friends at home and in the process share meals and gifts
  • Plan for travelling at a time when it is likely to be less expensive and save towards it
  • Consider Picnics and Parties

Save on gifts

Buying gifts for all your family, friends and other important people in your life can turn out to be one big expensive affair and especially if you don’t have enough cash set aside to cater for this. However, you can also make the gifts genuine, thoughtful and memorable at a relatively low cost using the following tips:

  • If you are in service industry, offer a free session of your services as a gift
  • Get creative and make gifts such as cards for your children’s teachers, boss, work mates etc.
  • Instead of buying a gift for each of your friends, bring them together and cast lots where each buys a gift for one and gets one from another
  • When coming up with a list of gifts to buy, include other options of about the same cost to avoid spending more in case the first choice goes out of stock or is unavailable

Shop Early

Shopping early helps to spread out your spending and also gives you time to shop for great deals. Since holidays are already fixed, come up with a list of everything you need to buy and start buying. Be on the lookout for discounts and offers such as the end of summer sales and stock up on items with the best deals.

The Bottom Line

The Holidays don’t have to leave you with the bitter after taste of racked up debts. With proper planning, a few adjustments and being flexible enough to accommodate cost effective ideas, you can still enjoy your holiday without disrupting your future financial plans.

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