How to Avoid Holiday Debt

From Family Circle

It’s a cruel truth of monetary timing that the holidays fall at the end of the year—just in time to torpedo your annual budget. Family parties, gifts for your kids’ teachers and seemingly endless shopping can result in huge bills. But careful strategizing can keep your spending out of the stratosphere. Here, the experts weigh in on common snafus, what to do about them and how to get ahead in the coming year.

Don’t wait until the last minute.

Sprint around the mall in a procrastinator’s panic and you’ll spend twice as much as you intended. Think of early as the new black: retailers want to be the first to get your money, and hitting those November sales means no springing for express shipping.

Keep track of gift ideas.

“I have a list on my phone of people for whom I buy gifts, and when inspiration comes to me—whether it’s in January or June—I make a note of it,” says Megan Poore, a financial planner in Austin, Texas. “Then when it’s November or December, I actually know what I want to buy.” Having recipients in mind throughout the year also comes in handy when you happen upon a great spring sale, for example.

Resist shopping the post-holiday sales.

Some people think they’ll save by buying next year’s supplies during this year’s end-of-season blowouts. Not always true. “I can’t anticipate what I’ll want next year,” says Mary Hunt, author of Debt-Proof the Holidays. “Invariably I buy stuff I don’t use or don’t like, and worst of all, I can’t recall where I put it.” If you can reliably select holiday cards or an on-clearance gift for your aunt ahead of time—and keep track of everything—the year-end sales may save you money. Otherwise, skip them.

Don’t pay with plastic.

People spend more when they use credit cards than when they’re purchasing with cash. You can’t overdraw an account if you’re paying in cash.

Always search for coupon codes.

Online shopping is great, but look for promotional codes before clicking “buy.” Type a site’s name and “coupon code” or “promo code” into a search engine, and you may find online promo codes or coupons you can use—for free.

Start with a list—and a budget.

Heading to the mall without a list of giftees or a spending limit tempts budget-busting fate—it’s too easy to grab just one more thing. Set a maximum amount per person or an overall budget for everyone, then stick to it. That includes stocking stuffers, so don’t get waylaid by cutesy items near the checkout.  Remember to factor in shipping costs if you’re mailing gifts.

Look to save by divvying up a package.

“Choosing gifts one by one is more time-consuming and expensive than buying sets that can be divided,” says Stephanie Ann, author of The Cheap Diva’s Guide to Frugal and Fabulous Living. Buy a collection of ceramic bowls and fill them with baked goods, for example, or pick up a set of candles to split among your kids’ teachers. Use mugs to package tea, cocoa or ground coffee. Wine is also available (and discounted) by the case—and makes a nice hostess gift.

Bake instead of buying your gifts.

A handmade treat lets the recipient know you thought of her, and it usually costs less than something from a store. Consider giving homemade granola, a tin of cookies or spiced pumpkin bread. It’s the thought that counts—particularly when it’s delicious.

Don’t overlook entertaining costs.

If you throw an annual holiday party, stock up on the basics early. Watch for sales on items you can freeze or keep in your pantry, such as canned pumpkin, frozen rolls and meat. “I always serve pork tenderloin over the holidays,” Hancock says. “So by November, I’m already looking for specials.” Also consider borrowing holiday-themed decor. “You don’t need a matching set of everything,” says Lisa Reynolds of the savings site RedPlum.com. “If you have 10 reindeer plates and your friend has 10 snowflake plates, you’re all set.” 

Start saving in January.

Didn’t have time to implement these strategies this year? That’s OK; you can saving start now to get ahead for next year. If you set aside $50 a month, you’ll have nearly $600 to spend in December—without whipping out your credit cards. “We used to call that a Christmas club,” says Hunt. Open an interest-earning savings account and have the money automatically transferred out of your checking account every payday. Start with $20 or $25 each cycle. (Just don’t forget about it in December!)

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