Now that summer unofficially has come to an end, the holiday shopping season is about to begin. Unless you plan properly, it is easy to go hairline-deep into debt.
For far too many of us, “‘ho-ho-ho’ turns into ‘owe-owe-owe,'” says Gail Cunningham of the National Foundation for Credit Counseling.
Luckily, you can break this pattern by finding ways to celebrate joyously, but also within your means.
Start by taking a clear-eyed look at your current finances. Did it take you months to pay for last year’s holiday? Are you keeping the books balanced right now?
If you currently carry a credit card balance, don’t add to the problem. Resolve to pay cash as you go, keeping in mind that this probably means buying less.
Following are some tips for keeping your holiday debt-free.
1. Face reality and tap your creativity
Tightening the purse strings should not condemn you to a cheerless Christmas. You just need to be flexible and creative.
The first thing to consider is how much you want and need to spend, and who will get gifts. Do you still need to give presents to nieces and nephews who have homes and families of their own?
Maybe this could be the year when you institute an “adults draw one name” rule, where each person gets a name and gives a present to that person only. Or, you could modify this to a “gifts only for those under 18 or over 80” rule.
For your own children, try to limit yourself to buying each of them a quartet of presents that follows the four-gift rule:
- Something they want
- Something they need
- Something to wear
- Something to read
Four presents are plenty. Set the bar too high too early and by the time your kids are in their teens, holidays will almost surely become exercises in overspending (on your part) and letdown (on theirs).
2. Find funds and slash spending
Even if you pare down your gift giving, you still will have to find a way to pay for those presents. Make the process easier by simply vowing to pay less. (See “9 tips to slash your spending on holiday gifts by 20 percent.”)
If you have unused items, turn them into holiday gifts. Regifting done right is a true win-win: A present you don’t have to pay for plus less clutter in your home.
You also have a few months to set aside some funds to pay for holiday gifts. Money Talks News recently suggested great ways to save hundreds of dollars between now and the end of the year in the article “11 Easy Ways to Raise Holiday Shopping Cash.”
3. Keep your emotions in check
The holidays are emotionally fraught, which is why even budget-minded people can go overboard. I’m fairly frugal, but the sound of Christmas carols in a store turns me into a sentimental idiot.
Sometimes I find myself holding an item and thinking, “Oh, wouldn’t my daughter/nephew/best friend love this?” — all because “O Little Town of Bethlehem” was playing over the loudspeaker.
Marketers know this. They know all the tricks to part us from our cash. Phrases like “shop here for the perfect gift” or “your family deserves the best” somehow make us feel that buying items will bring us love and appreciation.
Our own families can do a psychological number on us, too. Does your brother talk proudly of how much he spends on his kids each year? Is there a sister who demands (and gets) expensive gifts?
If so, you may feel pressured to keep up. That’s a game you can’t win.
Torpedoing your finances for the sake of a single morning of wrapping-ripping just doesn’t make sense.
Giving presents is fun, but worrying about credit card bills is a supreme downer. That’s why a holiday reality check is essential, Cunningham says.
“Consumers need to ask themselves if taking on unmanageable debt this holiday season is worth putting their financial well-being at risk,” she says.
How do you rein in spending during the holidays? Share your thoughts in our Forums. It’s a place where you can swap questions and answers on money-related matters, life hacks and ingenious ways to save.