Is going into debt from overspending during the holiday season on your wish list? Didn't think so. As the season rolls in, many consumers who racked up credit card debt last year are still paying for last year's purchases. While we are by no means suggesting you pick up a bag of coal and distribute it to your loved ones, you should never go into debt from shopping, no matter what time of the year.
There are a number of ways to avoid overspending. Financial counselor Andi Wrenn advises that you only charge what you can pay back before your billing cycle is up. Because if you decide to charge all of your holiday shopping to your credit card and don't pay it back right away, the interest adds up. If you spend just $600 on your credit card (at 11.99% interest) this season and make minimum monthly payments, you could pay up to an extra $320 and it could take you more than 7 years to pay off. Talk about an unwanted Christmas gift that keeps on giving!
If paying off your 2011 holiday gift expenses in 2018 sounds like something you'd rather avoid, here are some additional tips to help you control your holiday spending this year and next:
Don't Overextend Yourself
Most importantly: Don't give more than you've got, and don't borrow more than you can pay off. While making purchases in cash is best, if you have to buy on credit, make sure you have enough money to pay your card off immediately, or before your billing cycle closes. Treat your credit card more like a charge card and remember that gift-giving is a gesture, not a sacrifice.
Set a Budget
Sites like Consolidated Credit Counseling Services offer a free spending planner worksheet to help consumers find ways to trim their expenses, both during and after the holidays. It's particularly important to have a set budget and a game plan going into the holiday shopping season.
The Cash Only Diet
People who don't use debit or credit cards are less likely to make extra purchases or spend more than planned, according to Kevin Gallegos, a Vice President at Freedom Debt Relief. Before going shopping, Gallegos recommends setting aside a budgeted amount of cash in your wallet for each intended recipient before going shopping.
Shop Alone and with a Full Stomach
Yes, it's true. Your eyes are bigger than your stomach and wallet. Impulse spending is easier to control when you're at it alone. Plus it's never a good idea to go bargain-hunting when you're tired or hungry, as these feelings which could lead to more rash spending.
If items go on sale after the holiday rush, you can sometimes be refunded the difference between the price you paid and the sales price. Walmart, for example, announced that if a customer finds an item (that he or she already purchased at their stores) for less elsewhere any time before Christmas, the merchant will pay the difference in the form of a gift card.
No "Lil' Something Extra"
Stores are laid out in such a way as to draw you in to spend money. Try not to fall victim to buying the little "extra" gifts that your niece will love, in addition to your pre-planned purchase. These purchases can add up fast and break your budget.
While it's ill-advised to purchase additional gifts for family and friends already on your to-buy list, consider stocking up on a handful of "universal" holiday gifts on sale for the folks that you may have forgotten to buy for. These can include picture frames, coffee table books, photo albums, movies, or kitchen gadgets that are discounted.
Shop All Year-Round
While it may seem counter-intuitive, all-around frugal shoppers tend to keep a holiday shopping list all year long, and buy gifts when they see them on sale during the year. It is advisable to save some of your holiday shopping budget and put it towards after-Christmas shopping for next year's gifts. At the very least, you should be able to snag some of those "universal" gifts pretty easily.
It doesn't matter if you're shopping online for your holiday gifts this season, or if you want to venture out to the mall, charging all of your gifts to a credit card will add up quickly. To avoid overspending this year, put some of these pointers into action. And to save even more on the gifts you want to give, be sure to peruse the dealnews Gift Guide and sign up for email alerts.