A lot of people make use of their credit cards when shopping for the holiday season on the premise that they are going to pay all of the newly formed debt off within only two or three months time. Unfortunately, most people are still trying to tackle these credit card debts six to eight months later, and by then they are paying as much as 10 percent to 20 percent more because of credit card interest, making the holiday bargains much more costly in the end. This debt pattern is repeated every year for many Americans. Debt and the holidays tend to go hand in hand in this day and age, because incurring debt during the holidays is something that seems to make sense to some people, even though incurring debt for gift buying purposes is one of the worst possible things that you can do. Using credit cards for gift giving is an act that simply leads to impulse buying and overspending, along with resulting in a steep increase in debt.
A better approach to avoiding debt and the holidays is simply to save small amounts of money all throughout the year, putting together a fund specifically designed for holiday gift giving. Put together a list of people that you would like to give gifts too and how much money you can afford to spend on each one of them. This way you can plan ahead and pay cash for each purchase. As soon as the cash is done, you are done shopping.
If you find it to be difficult for you to save money all throughout the year, then consider joining a Christmas Club, which is something that many credit unions and banks still offer. You put so much money into the account a week into the account at your bank. Sometimes this money can be automatically deducted from your paycheck or regular bank account to save you the effort of doing it yourself. The account will most commonly accrue interest at the same rate as traditional savings accounts. In October, November or December the money will be transferred into your regular checking account, allowing you the necessary means to get your holiday shopping done, debt free!
Four other things that you can do to stay out of debt during the holiday season include:
- Setting spending limits. How much can you set aside reasonably every month based on your budget? Plan ahead and only put away the amount that you can actually afford.
- Putting together a list. Follow Santa’s example and put together a list of people deserving of gifts including smaller gifts for teachers, babysitters, delivery people, etc. Budget ahead of time through planning and you will not end up with any unnecessary expenditures.
- Setting a limit. Decide how much to spend on each person on your list and make sure to add everything up so it doesn’t exceed the spending limit that you set for yourself.
- Deciding where to shop. Comparison shop by shopping early and you can save a lot of money. If you wait until the last minute, you won’t have time to shop around and may end up paying more for something that could have been purchased for much cheaper a week or two earlier.
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