Photo (cc) by juhansonin
Want to make your holidays happier? Easy. Stop yourself from overspending. Americans pile nearly 40 percent more debt than usual on their credit cards in December, research by credit bureau TransUnion shows.
Get a grip on your holiday shopping by cutting your spending by 15 percent or 20 percent. Money Talks News founder Stacy Johnson explains how in the video below. Check it out, then read about the nine steps to cut your holiday shopping bill.
1. Make a budget
Save 10 percent to 15 percent just by thinking ahead before diving into holiday shopping mode. Do it by deciding exactly how much you can spend without putting your finances in jeopardy. Next, make a list of everyone who’ll get a gift. Think about trimming that list so you can cut spending or lavish a little more on the people closest to you. Now divide up your budget among everybody on the list.
2. Cross yourself off your list
You’ll save a nice chunk of money by eliminating “self-gifting.” The National Retail Federation says most shoppers plan to spend an average of $130 on themselves while doing holiday shopping. If buying for yourself could put you in the hole, make a plan for ignoring holiday promotions, even if you spot things you’ve been wanting.
3. Stay focused
Temptation is everywhere. It’ll take focus to stick to your plan when you see the perfect gift that’s pricier than your budget allows. Be realistic. There are dream gifts and there are gifts within your budget. They’re often different.
4. Double down on cash rewards
If you have a credit card that gives cash-back rewards, consider using those rewards for holiday shopping. Some cards offer bonuses if you redeem your rewards for a gift card for certain merchants that your credit card company partners with. Some cards may even double those rewards, turning $20 in cash back into a $40 gift card. Here’s a guide to strategic use of cash-back rewards cards.
5. Save 10 percent on gift cards
Gift cards are great for holiday shopping. You can sell unused cards to buy a gift for somebody else. You can give gift cards for presents and also use them for shopping, saving 10 percent on everything you buy. Here’s how: Buy gift cards at a discount through online outlets. For example, you can get a $100 gift card for $90. That means 10 percent off your shopping or 10 percent off the card you’re giving someone else.
Donna Freedman shared tips and strategy in a recent post here about buying and selling gift cards. She wrote:
The easiest way to find the best deal is through an aggregator site called Gift Card Granny. Type in the card you want to buy … and check the rates among the sellers displayed. The aggregator will also let you set an alert for a card you want but don’t see listed.
6. Stick to cash
Get enough cash to take care of your entire holiday gift budget, put it in an envelope and use it only for presents. When you’re out of money, you’re done shopping.
To see what you’re saving by going with cash instead of credit, use the Federal Reserve’s credit card repayment calculator.
Here’s an example: Gallup pollsters say Americans plan to spend $786 on average for holiday gifts this year. Credit card APRs currently range from 6.9 percent to 23.9 percent, depending on your credit score and on the card. So, let’s say your card charges you 12.99 percent on your holiday debt. If you charge $786, making just the minimum payment each month and adding no new charges, it’ll take four years and $244 in interest to pay it off.
7. Save big at resale shops
If you shop charity shops, thrift shops and even consignment stores, you know that some of the merchandise is brand new with tags still on it. If you enjoy the thrill of treasure hunting, you can save huge amounts and stretch your gift budget further by shopping resale stores.
8. Save 100 percent: Use your imagination
The gifts you make are infused with love. Really. Not crafty? Substitute imagination. Gift your time – a free car wash and auto detailing, for example. Or give forgiveness: “What kid wouldn’t like to receive a get-out-of punishment-free card?” Stacy Johnson says.
If you love stirring up stuff in the kitchen, make cookies, snack mixes, flavored mustards and vinegars. Give homemade marshmallows with cocoa. Recipes and ideas are easy to find online.
If gift making is your thing, Martha Stewart, for instance, has instructions for 22 handmade holiday gifts “for him,” including a burlap leaf bag and garden kit, a set of map coasters, tins of flavored popcorn, and very cool photo cube bookends. Martha has another 54 ideas and instructions “for her,” including block printed tea towels, bath fizzies, lip balm and felt slippers. The 34 handmade kids’ gifts include felt stuffed animals, an animal night light, a snow globe and a cookie puzzle in a box.
9. The best tip of all: Start early
The absolute best way to save 20 percent on your holiday shopping? Begin early. You don’t have to be someone who gets all the holiday shopping done in July (although it’s a great strategy, if you are). But last-minute desperation trips to the mall are the way to rack up ridiculous bills.
It’s not too late to sit down now, plan your spending and your savings, and get it over with so you can relax and enjoy the season.
If you have tips that helped you save on holiday spending, share them with us in the comments below or on our Facebook page.