One of the biggest holiday shopping temptations is getting into debt. Whether trying to get a great Christmas tree for your home, or looking for the “perfect” presents for friends and family, it can be easy to just put it on a credit card or take advantage of 0% interest loan specials. And you will never hear the phrase “Apply for our store credit card today and save 10% on today’s purchases” more than you will during the holiday shopping season (which, by the way, started two days before Halloween this year).
Avoiding debt during the holiday shopping season can be difficult, but it is doable. Just be practical about what you are buying, and plan ahead.
Make a holiday shopping budget
Most people have extra money that they plan for holiday shopping. Before you start spending, make a holiday shopping budget and stick to it. If you already have an artificial Christmas tree, this year may not be the time to buy a new one. There is no rule that says you have to buy new decorations every year.
Also, stick to a gift budget. Get with family and friends and suggest that everyone abide by gift limits. Or, it is possible to have a gift drawing, where everyone draws names out of a hat to see who they will be buying gifts for. This way you can keep to your holiday shopping budget, and help everyone else stick to theirs as well. Homemade gifts can also help. My sister-in-law and her new husband are a little short on cash this year (students!), so she is crocheting their gifts to friends and family. This is an inexpensive way for them to show their love without having to get into debt.
Avoiding debt in the form of loans and credit cards
Department store credit cards are horrible deals. No matter how tempting that 10% savings may sound, carrying a balance for months easily erases that savings with interest charges. Sometimes even carrying the balance for one month erases the 10% savings. You are much better off just paying for the items and staying out of debt. The same is true of tempting 0% interest loans offered at many stores around holiday time. The idea is that in six months when the rate goes up, you still won’t have the item paid off (this is especially true of 0% interest and 0 payments), and then you will start paying even more. Plus, if you are late, or if you miss a payment, your 0% interest or 0 payments disappeards immediately. And your interest rate can jump to 29%.
Planning for next year’s holiday shopping
You can plan for next year’s holiday shopping by thinking of gifts throughout the year. When my husband and I see something that we know a family member would like, we buy it. Spending an extra $25 on a shopping trip in April helps us avoid debt piling up all at once. It is much easier to buy holiday gifts throughout the year than to go on one large spending spree. Plus, it lets you take advantage of items that are on sale–items that might not be on sale as December approaches.
You can also benefit by saving a little money each year in a special “holiday shopping” savings account. Build up some cash meant for holiday shopping, and you won’t feel such a large pinch at the end of the year.