With gift buying, entertainment, and travel, the holiday season is an expensive one.
Every year the holidays bring on a repetitive pattern of debt: People buy their gifts using credit cards expecting to pay it off in 2 to 3 months, but 8 to 10 months later they are still making payments and accruing interest. This is what finance experts call â€œThe Holiday Hangover.â€
Consumers naturally spend more during the holidays and using credit cards only makes it easier to impulse buy and overspend. Credit card interest and debt can end up being overwhelming and lead to financial difficulties for months, and even years to come.
If you want to save money, the best time of year to make and keep resolutions is now.Â If itâ€™s too late for you this year, nowâ€™s a good time to start planning for next year.
Here are some strategies for keeping your spending in check and the holiday hangover at bay:
- Remember non-gift expenses â€“ Holiday spending doesnâ€™t stop at gifts. It includes travel, food, giftwrap, decorations, etc. Make sure all these things are included in your budget so you arenâ€™t left feeling like youâ€™re blowing the bank.
- Know what you have â€“ Make a budget and a list of people you want to buy gifts for and fit them together. Keep all receipts so you can make sure to stay on track. Organization and discipline are keys to avoiding impulse purchases.
- Reduce your gift list â€“ Make your â€œmust buy forâ€ list shorter by sending cards and letters. The power of a handwritten note is highly under-rated and a great way to express your appreciation.
- Pay by cash or debit â€“ If you donâ€™t have the money on hand, donâ€™t spend. Your family and friends donâ€™t expect you to sacrifice your credit for their gifts. And if you feel you must, at the very least, only put what you know you can pay off in one month on your credit card.
- Find alternatives to store-bought gifts â€“ Homemade gifts are great for your wallet and usually much more appreciated by the recipient because they have a thoughtful, personal touch to them. Be creative!
- Plan ahead â€“ Put â€œholiday fundâ€ money away into a high-yield savings account starting in January. The higher rates you earn, the more youâ€™ll have for next yearâ€™s holiday budget.Â And after making the effort, if you end up spending more than planned, donâ€™t feel guilty. Take a look at your budget and see what else you can cut down or out to make up for it.
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