We see it happen each year. The holiday season comes along, the invites pour in and the shopping list grows.
The only problem is you have debt and while you want to be diligent in avoiding digging that hole even deeper, you also don’t want to become a Scrooge this holiday season.
These debt management tips will help you keep your holidays merry and bright for you, your loved ones and your wallet.
Lows After The Holiday Season Highs
While the holiday season creates many joyful moments, it can also be a source of financial anxiety for many people.
The highs of the holiday season are followed closely by the dreaded January credit card statement. For the majority of Americans, this document comes packaged with anxiety, stress and frustration.
Last holiday season, Americans spent around $,1500 in holiday debt, up 5% more than the previous year.
Although this may seem like a relatively low number, many people are living paycheck to paycheck and may have to take out debt to afford the holiday season. Luckily, there are still ways to afford the holidays, maintain your budget, and manage your debt to avoid overspending and accumulating more bills.
Related: 70 Ways to Save More Money While Living Paycheck to Paycheck
Holiday Debt Management Tips
Demolish Your Existing Debt
The best way to win at getting rid of your debt is to start from the very beginning. When building a debt exit strategy include the following:
- The EXACT amount you owe. One of the worst things you could do is to guess your debt amount because an estimate can leave a large gap that could ruin your repayment plan when your intended end date comes around. Know your numbers inside and out!
- The interest rate of each amount you owe. This rate determines how much extra you will have to pay so knowing this number will help you with your budgeting structure as well.
- An account of who you owe. If you become familiar with your creditors and show them that you are being responsible they may be willing to offer you a better payment plan or work with your unique circumstance.
To help you stay motivated during the busy holiday season, do your best to make an extra payment. This could be small or large, whatever is comfortable for you. By doing so you reinforce your commitment to being debt-free to yourself as well as your creditors.
Related: The Secret to Paying Off Your Debt Faster
Achieving Financial Freedom with the Debt Snowball Method
Budget To Win
Become a SUPER budgeter by having two budgets on hand: your holiday spending budget and your general budget.
Having both of these budgets will show you a realistic view of your holiday gift desires and what you can actually afford. It takes the numbers and ideas you have in your mind and shows you visually what is truly required to make your ideal wish list happen or if revisions need to be made.
While this guide on how to create the ultimate budget is extensive, I highly recommend diving even deeper by checking out some of these links and resources as well.
Related: What is a Reverse Budget?
Budgeting With a Low Income, Yes It’s Possible
How To Get Your Spouse On Board With Budgeting
How to Come Up With a Bare Bones Budget
Be Diligent When Tracking Expenses
Over the next few weeks, money will come and money will also easily go. Knowing where every cent is going and how it’s being utilized will help you see the importance of being mindful with your spending. Also, it will help you prioritize what is most important to you over the busy season.
Diligence with money tracking provides you with the ability to build your money management knowledge, confidence and mindset and those are useful gifts to have at any time of the year.
Related: Best 7 Free Budget Tracking Software Programs
Put Away Your Credit Cards
Credit cards can be lethal to your positive financial habits and progress, especially when used during a time where swiping becomes second nature.
Mismanaged credit card use can quickly derail your debt management progress by racking up the dollars as you buy your gifts. It is easy to use credit cards because they are convenient and offer high credit limits but it’s all too common for the payments to become hard to handle and then late or missed, doing damage to the credit score your building.
Save for your purchases and then use cash (which is still King!) a debit card, or even load a prepaid debit card for your purchases.
Related: Best Strategies and Tips to Crush Credit Card Debt
Credit Cards Are Not Evil: Don’t Make These Common Credit Card Mistakes
Go Shopping Solo
When you go shopping alone something wonderful happens: you have control again! Solo shopping helps you to avoid peer (and kid!) pressure that can turn into unnecessary purchases that leave a dent in your budget and wallet.
Take a list, have your budget handy and set time aside to go shopping for ONLY the items you intended to buy.
Be Open to New Seasonal Delights
You don’t have to spend money to enjoy the season! There are so many options for free ways to enjoy the holidays without breaking the bank.
A great way to find out what’s happening locally or otherwise is to use search engines as well as your local bulletin boards to find a ton of ideas that are money free!
Be sure to read these great related articles that can also help you with your holiday debt management quest:
How I’m Preparing For Holiday Expenses
7 Ways to Bless Someone and Give Back This Holiday Season
This year, make holiday spending hassle and worry-free by implementing the steps above. Remember, money in your pocket and no added debt are two of the best gifts you could ever receive this holiday season.
What do you spend the most money on during the holiday season? What has helped you to keep your finances in check during this time of the year?
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