Keeping your holiday debt in check this season
Avoid massive credit card balances with a few frugal tips
The fastest ways to slip into debt during the holidays — and anytime, for that matter — is to spend without a budget (not having a realistic plan) and then compound the issue by not tracking what you actually spent (not facing reality). The result is massive credit card balances that need to be paid in January to avoid high interest charges, and that’s hard on your bank account and your mental health.
Here’s how to make the holidays frugal, without being a Scrooge.
Tally it up and slash it in half
In my household, we don’t start shopping until we’ve drawn up a full list of what’s needed, for whom, and the expected price. And we don’t forget to include ourselves: holiday outfits, party tickets, grooming, makeup and the like. Then we slash that total value in half, and that’s our budget.
The dramatically reduced number forces my fiancé and I to get creative and find ways to stretch our dollars, and set gifting boundaries with our family and friends. Though it might seem counterintuitive, limiting everyone’s generosity, through a Secret Santa, for example, will reduce financial stress and the gifts tend to be better quality.
Pay for gifts with points, gift cards and exchanges
I have loyalty rewards for the retailers I
frequent most often, and also on my credit cards. So, my go-to holiday move is to cash in my rewards for gifts and gift cards. There’s zero out-of-pocket cost to me and I don’t have to worry about my points becoming less valuable as time passes. Next, I use up leftover gift cards toward gift purchases. Last, if I’ve received something that we don’t need, like a duplicate bathing kit for our newborn, I’ll exchange it for a gift for someone on our list.
Parents, some financial institutions will even allow you to cash in points to make RESP contributions for your children, and education is an incredibly valuable gift.
Only buy quality gifts that are on sale
I try to stretch what I’m spending by taking advantage of sales and discounts. I check in-store and online specials and clip digital coupons.
Generally, this is a good week to shop because of Black Friday and Cyber Monday sales. Just watch out for high shipping costs and exchange rates and avoid “buy now, pay later” plans as that’s just another form of debt.
This principle applies to experiences, too: movie and theatre tickets, amusement park passes and the like.
Get crafty
Make host and hostess gifts rather than buying another bottle of wine. If that goes well, try making other gifts.
As you spend, track every dollar using a spreadsheet (I like using Google because I can share it with my fiancé), and stop spending whenever you’re close to your budget limit. Just remember, the cheerfulness of your holidays doesn’t increase if you spend more.