Log out
Key takeaways
- Give yourself a holiday budget. Planning your expenses can help you manage your finances more effectively and prevent overspending.
- Utilize cash-back and rewards programs, compare prices, and take advantage of sales. Smart spending habits can stretch your holiday budget even further.
- Prioritize paying off holiday debt by targeting high-interest debt first, considering a balance transfer credit card, or by negotiating with creditors for a lower interest rate.
For many people, the holiday season is a time to give and indulge in special treats. But if you don’t have a plan or budget in place it can easily lead to overspending and a mountain of debt. Lending Tree found that the average amount of holiday debt taken on by Americans in 2022 was $1,549 and that 36% of consumers incurred holiday debt.
Fortunately, it’s possible to spread holiday cheer without overspending. Here are a few tips to avoid racking up the bills this holiday season. And if you do find yourself taking on some debt, we have a few ideas to help get you back on track quickly.
Tips to Avoid Holiday Debt
1. Create a Holiday Budget & Track Your Spending
Planning for the holidays is key. Before the holiday rush, decide how much you can afford to spend. List all expected expenses including gifts, decorations, food, travel, lodging, parties, and anything else not in your regular budget. Next, add everything up and cut any items that exceed your budget. As you shop, use apps to track your spending and make sure you don’t overindulge.
The app that makes budgeting easy!
Find a budget that works for you. Increase your savings. Grow your investments.
2. Take Advantage of Sales
Look out for sales like Black Friday or Cyber Monday – a lot of retailers extend special pricing all month long. Check local newspapers or online for coupons and promo codes. Then plan your shopping to get the best deals. You can also use online tools like Honey to compare prices and ensure you get the best price.
3. Redeem Your Credit Card Rewards
Don’t let your credit card rewards go to waste. A lot of them expire to encourage you to use them. Maybe you’ve accumulated enough points to fly home for free. Or perhaps your cash back can cover your gifts. Cashing in on your credit card rewards during the holiday season can help alleviate some of the costs and save you money.
4. Use Cash
One strategy to stay within budget is to pay with cash. This is because it’s harder to part with cash than it is to swipe your credit or debit card. Withdraw a set amount of cash based on your budget and only use that for all your holiday shopping. This way you’re aware of each dollar you spend and are more likely to stick to your budget. Just keep your receipts so that you can exchange any gifts and continue to track your spending.
5. Sell Items and Shop with Profits
We all have plenty of clutter around the house. The holiday season is a great time to declutter for the new year and make some extra cash. You can sell any items you no longer need online or via apps like Facebook Marketplace and Craigslist. Then use the money to cover your holiday expenses.
6. Get a Seasonal Job
Demand for labor is up during the holidays making it the best time to find a side job. Retailers typically hire extra staff to cover the holiday rush. Delivery drivers are in high demand with the rise of online shopping. Holiday parties need extra event staff to help with everything from decorating to catering. Take on a part-time retail job for a few weeks and put the extra cash toward your holiday shopping.
7. Lower Your Gift Budget
Prioritize spending time with friends and family over fancy gifts. Opt for handmade gifts that don’t break the bank. Or thoughtful presents that focus on experiences, memories, and quality time. Propose a Secret Santa or white elephant gift exchange to limit the number of gifts you need to buy. There are plenty of ways to give and enjoy the holidays without going into debt.
Interested in buy now, pay later apps this holiday season?
Check out Perpay, the buy now, pay later app that also build your credit.
How to Get Out of Holiday Debt
1. Take Advantage of Low or No-Interest Introductory Offers
Look for credit cards offering low or a 0% APR for a certain period and transfer your balances. This can save you a significant amount in interest charges. Just make sure to pay off your balance in full before the introductory offer ends or you may be charged interest from the beginning.
New
2. Ask Your Credit Issuer to Lower Your Rate
Call your credit card company and ask for a lower interest rate. If you have a good payment history, they might be more willing to negotiate. Lending Tree found that 70% of people who asked for a lower rate got one.
3. Consolidate Your Debt
Take out a debt consolidation loan and immediately pay off your credit card debt. The loan should have a lower interest rate than your credit cards – and most loans do since credit cards have notoriously high interest rates. A debt consolidation loan makes it easier to manage your debt since you will only have one bill. And you can get out of debt faster and save money by paying less in interest.
Secure your Upgrade debt consolidation loan today!
Low fixed rates – No prepayment fees – Fast funding.
4. Pay More Than the Minimum
Paying more than the minimum reduces your overall interest and will save you money in the long run. Credit card interest compounds, which means you’ll be charged interest on your interest. Paying more than the minimum – ideally your full balance each month – will help lower the amount of interest you’re charged and help you pay off your holiday debt faster.
5. Pick a Repayment Strategy and Stick with It
Choose a debt repayment strategy (like the snowball or avalanche method) and stick to it. With the snowball method, you pay off your smallest debt first, which gives you a quick win and can be highly motivational. The avalanche method, on the other hand, has you pay off the debt with the highest interest rate first. This will save you money in the long run. Whichever method you choose, consistency is key. Regular payments and sticking to a plan will gradually reduce your debt.
Struggling with credit card debt?
If you have debts over $10,000 we can help! Lower your monthly payments. Repair your credit score. Get out of debt in 12 to 48 months.
Final Thoughts
The holiday season doesn’t have to lead to financial stress. Create a budget, prioritize your holiday spending, get creative with gifts, and find extra money. If you need more motivation, imagine what starting a new year debt-free will feel like and the financial freedom it will bring! Remember that the memories you create with family and friends will be held dearer and last longer than any gifts you give. Happy holidays!
