Don’t let holiday spending follow you into the new year as debt
The holidays, while often joyful, can also be a source of stress and worry for many. For most people, the high cost of gifts, decorations, travel, and entertainment can dampen the holiday season and start the new year on the wrong financial foot – in debt.
In fact, according to NerdWallet, 56% of American shoppers added to their debt during the 2016 holidays. Plus, today almost 15% of those shoppers are still paying for 2016 gift buying.
So what does that really mean? Gift-buying American’s are on track to spend an average of $1,000 during the holidays. If that is all financed by your credit card and you can only afford to make the minimum payment of $30 per month, this means your 2016 holiday shopping won’t be paid off for 7 years or until 2023! While this is costing you future savings and probably adding more stress, those 2016 gifts will also cost you an additional $565 in interest, or 50% more. So how can you avoid this?
First, a holiday spending budget is necessary, but it’s not the total solution to not adding debt.
A spending plan during the holidays is necessary, but the real magic is sticking to the plan. For example, while roughly 70% of shoppers make a budget, over 50% don’t follow it. So just having a budget isn’t enough. You also need to set a realistic ceiling for your holiday spending.
To help get you started, here are three tips for making your holiday budget and spending a success:
First, make a holiday spending plan. List out everyone you want to give a gift to and their potential gift options and cost. Now also write down your realistic spending ceiling. This will show how realistic your budget is and give you the average amount you can spend per person. From here, you may decide to allocate funds from one person to another or to start prioritizing your list by checking it twice.
Look out for sales, but don’t get lured in by them. Once you have your list, start researching sales. Remember just because something is on sale doesn’t mean you can’t get a better deal somewhere else. So remember to shop your sales around. Also, don’t let the excitement of “the sales” take you off course and over budget. Just because something is on sale doesn’t mean you need 1, 2, or 5 of them. Buying 12 and getting 2 free is not a deal you want.
Leave your credit cards at home. If you’ve done your research and you are ready to buy, then why not use cash? I know it might seem drastic, but bringing cash shopping is a sure-fire way to stay focused and on budget.
However, not all plans or budgets are fool proof. So if you do end up with holiday debt, remember to prioritize paying it back right away. Use the beginning of the year as a reset to cut spending and pay off debt. Don’t be one of those people who at the end of 2018 is still paying for 2016 & 2017 gift buying.
Remember, the holidays are supposed to be a time of joy and coming together, not debt. So have a plan and be smart about how you shop this year so you can enter 2018 with a clean financial slate.
For more information or help on creating a budget or paying off debt, contact me at firstname.lastname@example.org
Happy holidays and new year!