November 27th, 2013
How to Prevent Debt During the Holiday Season
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**Today’s guest post is contributed by Lauren.**
The holidays can decimate your finances if you’re not careful, which is why it makes sense to be prepared. There are numerous ways to prevent debt during the holiday season, but the one factor all of these tactics have in common is that they require planning and forethought. If you want to save your wallet later on, clear your schedule and mentally prepare yourself for the holiday season.
Make a Budget
Unless you are fabulously wealthy (in which case, good for you!) you should set a budget for your holiday spending. The best way to do this is to pick a total amount you feel the most comfortable with spending, make a list of everyone you have to buy for, and then divide your total amount by the number of people you have to buy for. Adjust this number for those you feel you should spend more on (such as a significant other or parents) and those you could get away with gifting homemade or inexpensive gifts (co-workers or distant relations.) Even if you only loosely follow your budget, at least you have a guideline for how much you’d like to spend, and this will help keep holiday spending in check.
It is a retailer’s primary goal during the holiday season to get consumers to spend more. After all, you are already out spending! The best way to stay in control of your holiday budget is to avoid the sales that encourage you to spend more, such as flash sales or BOGO’s. Many stores offer deep discounts on merchandise both before and after Christmas. To keep your holiday budget on track, only shop sales for predetermined items and then leave the store with only those items. It is very important you stick to this rule!
I know each year I will need to buy a gift for each member of my immediate family. Because I know I will need gifts for these family members, I shop throughout the year for my mom, dad, and brother. This helps “break up” my holiday spending, since I’m not spending so much in one month, and helps me avoid the seductive holiday sales (see above) during the busy holiday season.
Save on Holiday Travel
Holiday travel is another area where planning ahead could save you big money. Buying early not only allows you to spread out your spending over several months, but also typically results in a cheaper trip. Flight prices are often more expensive around the holidays, and grow increasingly more expensive from year to year.
Most often, people pay to travel to see their families and provide them with a gift. Why not do one or the other? This can help defray costs while keeping the spirit of the season. It should also be noted that spending on travel while you are in debt or paying off debt is usually a bad idea.
Declare a “No Spend” Christmas
There is nothing wrong with telling your friends and loved ones that you are having a “no spend” Christmas. If your financial priorities dictate a big milestone—such as a house, baby, or other large expenditure—quietly explain this to your family or friend planning the party and let them know you won’t be able to provide gifts this year. There are many low-to-no-spend options for gifts that can still let others know you are thinking of them.
Taking the time to plan your holiday expenditures is the only way to save yourself from being surprised by a whopping credit card bill or having to make late payments on your other loans come January.
Lauren Bowling is a personal finance writer at ReadyForZero, a website that helps people get out of debt faster on their own. She enjoys writing about all things finance, relationships, and self-esteem.
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