This expensive season might leave you with persistent debt. According to the NerdWallet 2022 Holiday Shopping Report, 31% of 2021 U.S. holiday shoppers who purchased gifts with a credit card had not yet paid off their balances.
With careful planning, it is possible to avoid holiday debt. But if you exceed your budget and hold credit card debt, there are strategies to mitigate the financial harm.
1. Begin with a strategy
Start with your budget, gift list, and shopping list if you are hosting parties. The use of shopping applications and web browser extensions can make it easier to monitor price trends, compare prices from various retailers, locate promotional codes, and get cash back.
Online shopping facilitates overspending due to its ease and enhanced user experiences on merchant websites.
According to Emily Rassam, senior financial advisor at Archer Investment Management in Charlotte, North Carolina, all of these firms are striving to provide the quickest, most frictionless method of purchasing goods. Rassam controls her impulse to spend by adding products to her cart as she sees them, but only assessing the contents of her cart and making a purchase choice once per month. A little additional time between locating products and purchasing them might cause you to second-guess your selections and remove a few items from your basket.
2. Watch out for hidden fees
Don’t overlook tiny elements that add up, such as gift wrap and decorations. Reuse anything you can; if you have a closet full of old gift bags, this is your moment to shine. Rassam suggests searching for substantial discounts on these things shortly following the conclusion of the Christmas season.
Now, it is also more expensive to host parties and feed hungry visitors. The Bureau of Labor Statistics reports that between October 2021 to October 2022, the cost of eating at home grew by 12.4%.
Beth Moncel, publisher of Budget Bytes, an online resource for learning how to cook on a budget, recommends sticking to a simple, affordable Christmas dinner. “Classic dishes are straightforward, do not require exotic ingredients, yet are nonetheless tasty. Especially if additional butter is added “Moncel wrote in an email. “Adding a little extra butter is an easy and inexpensive method to enhance any recipe!”
3. Develop a debt payback strategy for the coming year
If you incur Christmas debt, pay it off as one of your New Year’s objectives. Several activities may be taken to maintain motivation:
— DECREASE INTEREST PAYMENTS: Consolidate high-interest debt using a credit card balance transfer or a personal loan. Note, however, that although these products may help you pay less in interest (depending on the conditions you qualify for), they do not address the underlying causes of your debt. They can be useful while you attempt to pay it off.
— REDUCE EXPENSES AND ATTACK DEBTS: Begin the new year by reviewing recent credit card and bank accounts to determine where you may be able to save money. You can use any savings obtained in this manner to credit card payments. Use any monetary presents or Christmas bonuses you may have received to reduce your debt.
— SEEK ASSISTANCE: Financial professionals and non-profit credit counseling agencies can assist you in understanding your complete financial situation in order to take action. It can be difficult to resolve financial issues on your own, but unbiased guidance can make it easier to get started.
4. Commence preparations for next year
Heath Carelock, director of the Financial Empowerment Center at Prince George’s Community College in Largo, Maryland, cites his mother-in-law’s year-round commitment to holiday planning as a method for avoiding debt. “She begins to save for the holidays on January 1st. She attempts to purchase all of her holiday gifts by August.”
Carelock advises consumers to capitalize on holiday sales throughout the year. If a sale is approaching, he advises delaying a purchase until then.
Spreading out your holiday spending gives you more time to compare prices and find deals, and prevents you from quickly racking up a large number of credit card charges. Carelock states, “It is experiencing a steady burn as opposed to a firestorm.”
This piece was supplied by the personal finance website NerdWallet to The Associated Press. Sara Rathner is a writer for the company NerdWallet. Email: email@example.com. Twitter: @SaraKRathner.