The holiday season is filled with temptation and opportunities for overindulgence. Pumpkin pie and Eggnog are one thing, but charging more on credit cards than you can afford can have long term implications.
Self-discipline can go a long way to make this holiday season happier and more rewarding. Setting, and sticking to, a spending limit can prevent unpleasant surprises when the credit card bill comes. Credit cards are dangerous around the holidays because of course you want to buy more gifts for more people, but doing so will not bring you true happiness, in fact, overspending will have just the opposite effect.
Gifts purchased on credit end up costing more. Add in finance charges and you’ll ultimately pay more for your gifts than you think, it’s like voluntarily paying $50 for something that only costs $30. Of course you wouldn’t offer to pay the store more, why pay the credit card company when you don’t have to. Pay cash! If you can’t afford to pay cash for gifts, buy less expensive gifts.
Credit scores fall from high balances. You may not realize it, but the more you spend on credit, the lower your “debt to available balance ratio” becomes. This lowers your credit score, and can cause credit card companies to reduce your limits.
By sticking to a few spending principles, you can keep your holiday spending to a minimum and avoid the holiday debt hangover.
7 Ways To Avoid Holiday Debt:
- Save up. Spending cash instead of using credit for your holiday purchases allows you to avoid holiday debt all together. Of course this is pretty obvious, but planning for the holiday season early means setting money aside for holiday purchases. Start as early in the year as possible.
- Set a budget before you shop. Setting a spending limit and sticking to it will keep you from overspending. Be disciplined and don’t go over your budget, no matter what.
- Make a list with a dollar figure. Santa makes a list, so should you. It may seem like it takes the fun out of holiday shopping to boil down each person on your list to a dollar amount, but unfortunately it has to be done. People appreciate simple and meaningful over expensive and useless.
- Don’t shop for yourself. Avoid the “one for you, one for me” shopping mindset. You’ll end up spending double. Save yourself for the post-holiday sales.
- Ignore Sales. More often than not, they’re not really sales at all. Retailers use sales to sell more product and make more money, it’s a way to get you to buy more, not spend less. Stick with the list.
- Shop online. The internet makes it easy to shop around. It also makes it harder to buy on impulse. Since most retailers have everything in the store on their website these days, it just makes sense to compare prices and shop online.
- Leave your credit cards at home. If you do go to the mall do so without your credit cards. If you must use credit for your purchases, pick one credit card and stick to your spending budget.