With higher credit card interest rates, consumers may feel more of a pinch with holiday gift shopping this year. Throw in the costs of holiday cards, decorating, baking, holiday dinners and unplanned purchases, and holiday shopping can add up to a heap of change.
Many people are set back financially for months following the holiday season. One big reason is that credit cards make it easy to overspend, leaving individuals and families to deal with the consequences later. The problem with credit cards is monthly payments and long-term costs from accrued interest.
So what can you do to ensure you start the new year without new debt?
- Create a holiday budget. Include gifts, food, decorations and postage for holiday cards, wrapping supplies and the babysitter for your shopping trip. Then review your list, and determine where you can cut costs.
- Gifts to extended family and friends are an excellent place to start. Talk to those you exchange gifts with, and see if they’ll either forego the gift exchange or set a dollar limit. Another option for families or groups is to draw names, which reduces the number of gifts to be purchased. A “white elephant” gift exchange, where amusing and impractical gifts are given to entertain participants is also a fun option.
- Planning your gift budget based on value rather than the amount to spend on each person can also reduce holiday expenses. Decide in advance on a gift value for each gift recipient. Then look for great buys. Let’s say you’ve decided on a gift value of $50 for your sister. Now, try to find a gift that’s a $50 value but only costs you $30 or $40. With many gifts to buy, this can minimize the expense.
- Do you usually send out more holiday cards than you receive? If so, opt instead for a phone call during the holiday season. This is particularly meaningful for those you don’t talk to often, and it won’t cost you a thing. Another option is to only mail cards to those who send one to you.
- Cut back on the baking. When’s the last time you heard someone complain of a shortage of holiday goodies? Probably never. Most of us eat far more than we’d like to just because it’s there.
- If you’re hosting any parties, hold potluck dinners instead of playing head chef. You could offer to provide the main course, then ask invited guests to bring a specific type of dish to avoid duplicates.
- Eliminate your babysitting expense by exchanging babysitting with a neighbor — that way, each of you has the opportunity to shop without the kids.
- Plan your shopping before you head out. Do online research to find the best deals on the items on your shopping list. If you can’t find a good deal on something, consider an alternative. Also, check fliers and the ‘coupon’ page of store websites where you plan to shop.
- If possible, leave credit cards at home when you go shopping to avoid impulse purchases. Many people spend far more than they intend to by purchasing “irresistible”, spur of the moment bargains.
- Finally, if you do use your credit card, make a realistic plan to double or triple your monthly payments. This will reduce your interest expense and more quickly eliminate your debt.
Follow these tips to help you beat hectic holiday costs while still having all the great fun and making memories.
