How to Survive the Holidays Debt Free
The holidays are upon us! Fall break is here providing everyone a chance at relaxation, time with family and friends and hopefully some good eats before finals!
A lot of great things accompany this holiday season – fun, merriment, reconnecting with family and friends, food, football, time off from school and gifts. The gifts themselves bring a lot of joy and happiness but the process of gift buying can produce not so happy feelings.
A study of gift buyers from 2013 indicated that 47% of consumers did not set a holiday gift spending limit. In another survey from 2013, 36% of respondents stated that buying presents for their loved ones was more important that sticking to a budget.
Don’t let this be you! There are lots of ways to give great gifts to your loved ones without breaking the bank! Here are some ideas:
- Save early
The holidays come around at the same time every year. At this point it may be too late to save for the 2014 holidays but why not start setting aside a small amount in January and every month in 2015 for the next holidays? Put money into a separate checking or savings account where you’re less likely to spend it. (Remember the saying – out of sight, out of mind!) Your amount can be as little as $20 a month. By the time November-December rolls around, you could have $240 built up in savings and your holiday budget would be ready to go!
- Create a gift buying list
Writing a list of those you intend to buy for helps reinforce the list and keeps you from making unexpected gift purchases. Think of it as making a grocery shopping list, and only buying the items off that list. Review your list one last time and trim any unnecessary items to cut your costs.
- Set a gift price limit
Set a price point for all of your gifts and do not exceed it. If you’re part of a gift exchange with family or friends, suggest a spending limit so everyone receives and spends equitably.
- Do your research
Once you’ve created your list, it’s a good idea to shop around first. Compare items online at various stores for the best price and search for available coupons. One of the best places to start looking for coupons is online or utilize a coupon app, like RetailMeNot or SnipSnap. You could also consider layaway, which gives you the option of making small payments towards your gifts to avoid using a credit card.
- Avoid impulse buys
When it comes time to do the shopping, enter the store prepared with your list and have your research done ahead of time. If it’s not on your list, don’t buy it. If you see a gift that you haven’t considered before, write it down and go do some additional research on that item. You may be able to find it for a better price at another store.
- Put others first
Remember, you are shopping for others right now. If you see something that you really like, add it to your wish list for your family and/or friends. Put off purchases for yourself until after the holidays – you may get some cash over the break that can offset your cost for the purchase and who knows, it may be on sale later!
- Homemade can be very special
It may sound cheesey but homemade gifts tend to be less expensive and carry a lot of sentimental value which is more important than the price of a store bought gift. Look for ways to make personalized gifts for your family and friends. You’ll be surprised at how special a homemade gift can be to someone!
If you choose to purchase gifts on credit, here are some things to think about:
- Gifts bought on credit can cost more
You may receive a lower price if you pay with a credit card but once you figure in the interest cost or potential late fees, the actual cost of that gift may be more expensive than paying with cash or a debit cad. You should also avoid opening any store credit cards. The initial allure may be that immediate 20% off your purchase, however, many store credit cards tend to have APRs of 20 percent or more. After paying the cost of the interest, that will soon offset any money saved from using the offered discount.
- If buying online, consider the extra costs
If you set a price limit for your gifts but shipping the items is about $10, it’s easy to overspend and blow your budget. Browse online for any coupon deals or free shipping offers before making any purchases online to save a little extra cash.
Caution: Be aware of the site’s security. Make sure the site is secure and watch your accounts afterwards to ensure no unauthorized purchases were made. If you do notice charges you didn’t authorize, contact your bank or credit card company immediately to resolve.
- Unexpected post holiday expenses may postpone your pay off plan
You may buy a gift with a credit card and intend on repaying in January or February but what if something comes up? For instance, your car breaks down, you get a flat tire, or you have to make an unexpected trip home and now your funds have to be directed elsewhere. As a result, the credit card goes unpaid. When buying gifts on credit, a good rule of thumb is to always have a plan in place to pay off the card, even in the event of an emergency.
The holidays don’t have to be stressful. Follow these gift buying tips and you too will be able to survive the holidays debt free! It’s a great feeling to start off the new year on the right financial foot.
(Surveys from Harris Interactive and Accenture, 2013)