With the holiday spending season underway, it’s tempting to pull out the credit card and ring up the bills. While a credit card can be a great tool for holiday shopping, allowing you to earn rewards and cash back for your planned purchases, racking up debt now can be costly later.
If you are going to use a credit card, you need to make sure that you are prepared to pay it off at the end of the season so that you aren’t paying interest. If you want to limit debt this holiday season, here are a few things to consider:
Re-Assess What You Need to Buy
One of the best things you can do is re-examine whether or not you actually need to do the spending. Does everyone you know really need a gift? Do your kids really need $300 worth of stuff from you? Do you really need yet another expensive ornament for the tree? Does your light display really have to be that spectacular?
Consider your true needs, and re-assess them. One of the reasons that so many of us end up in debt at the end of the holiday season is due to the fact that we think that we “need” to get all of these things, and engage in all of these activities. Really think about what you need for the holiday season, and cut back on the things you don’t require.
Make a Budget
It always seems as though most things in personal finance come back to making a budget. There’s a reason. A budget is a good way to lay it out there. You see what you have, and you see what obligations you have. Everything left over is yours to use at your discretion. Creating a budget forces you to be honest with your finances, and it forces you to make a plan for your resources. You are much less likely to go into debt when every dollar has a job.
Of course, in order for this to work, you have to be disciplined enough to stick to your budget. Make that effort, and you can avoid debt this holiday season.
Find Alternatives
Next, you can find alternatives to your gift giving arrangement. Instead of buying something for everyone, consider doing a drawing: everyone only buys a gift for one person. You can also consider homemade gifts. There are a number of ways to spend less on gifts while still giving something that has a personal touch to it. Look for thoughtful ways to give without breaking the bank. Once you realize that there are alternatives to the “traditional” materialistic holiday season, you can save money and stay out of debt. Your true friends will understand your desire to stay out of debt.
Bottom Line
There’s no reason to go into debt this holiday season. Plan ahead, and look for savvy ways to save money. And if you are really serious about avoiding debt next year, start setting aside money as soon as you can. Save up what you can ahead of time, and your budget will be much less strained later.
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