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It probably happens every holiday season — you plan to spend only a certain amount. But when the wrapping paper has been torn off a multitude of gifts, and all travel to see friends and family is complete, you are left with an unexpectedly large amount of holiday debt.
This can be a great strain on your budget. However with a bit of planning and by following some common sense tips, there are plenty of ways to avoid holiday debt and leave your finances in good shape.
Even if you put away only $10-20 a week, if you start early enough, you’ll have a good bit of cash saved up to help you with your holiday shopping.
Holiday shopping can be hectic when you don’t know what to get for people. Many people simply go to the stores and start shopping. This is a good way to lose track of what you are spending and who you have already purchased gifts for. Instead, before you start shopping, make a list of everyone you are going to get gifts for.
If you don’t know yet what you are going to get them, put down an estimated dollar amount of what you plan to spend on each person. This will help you better keep track of your gift buying, as well as help you better plan your holiday budget.
Hopefully you have some savings, and, with a list in hand, you can now also create a holiday budget. In addition to what you plan to spend on gifts, put in costs for traveling, dining out, groceries for holiday dinners, etc. Compared with your regular monthly income and expenses, you should now be able to tell what you can actually spend comfortably without going over budget.
Using credit cards for holiday shopping is an easy way to get yourself into holiday debt. Avoid applying for store credit cards just because they offer a discount on a purchase. The discount will be eliminated if you can’t pay off the holiday debt before interest starts accruing. Understandably, you may still need to use a credit card for some purchases. If this is the case, try to pay it off as quickly as possible. It also makes sense to use a credit card that at least gives you back some rewards, such as cash back.
The holiday season has become increasingly competitive amongst retailers. Many Black Friday deals start early and continue all the way to Christmas. Instead of jumping on the first good deal you see, take the time to research prices for items you want. Many online e-tailers typically offer better deals than brick and mortar stores these day. And along with free shipping, you can save a good amount of money and avoid holiday debt.
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