By Jeffrey Schwartz
It’s easy to get caught up in the spirit of holiday giving. Black Friday, Cyber Monday and Boxing Day are just a few of the many ways retailers entice consumers to part ways with their money. Between aggressive advertising and in-store promotions, it’s hard to resist the temptation of buying “just one more gift.”
These one-off purchases and impulse buys are the ones that really throw our budgets off track – leaving us with a holiday debt hangover that is difficult to overcome.
Instead of getting buried under an avalanche of spending this holiday season, follow these tips to keep your budget on track.
By making a few small changes to your holiday spending habits, you can help yourself be debt free in 2013.
• Make a list and check it twice: Make a list of everyone you plan to purchases a gift for. After creating your list, give it another look and determine if you can eliminate anyone from this year’s list.
• Set a budget and stick to it: Now that you have a good idea of who you need to buy gifts for, set a realistic limit on how much you will spend on each person and stick to it.
• Think of alternatives to purchased gifts: Consider homemade gifts or gifts of time and service. Be creative. There are many ways to give gifts without going overboard on spending or losing the true spirit of the season.
• Look for bargains: Although it takes a bit more time, you can save a lot of money by using coupons, checking flyers and surfing the Internet for special sales on items you plan to purchase.
• Pay with cash: One of the easiest ways to stick to a budget and avoid a holiday debt hangover is to pay cash for everything. By shopping with cash, you can avoid the high cost of credit card interest and the dangers of exceeding your budget.
If you have already gone over your holiday budget, and are worried or stressed about January’s credit card bills, there are steps you can take now to ease the burden of tomorrow’s holiday debt hangover:
• Don’t add more debt: If you have over extended your finances this holiday season, put your credit cards away now and stop spending money. Charging more to your cards can only keep you in debt longer.
• Start paying off your balances today: Instead of waiting until the bills arrive in January, start making payments toward the balances today. Use any additional cash flow you receive between now and the holidays to begin paying off these purchases.
• Pay more than the minimum: Put any extra money you earn or receive toward your debt. The more you put toward your balances, the faster you’ll pay them off and the less you’ll pay in interest.
• Return unused purchases: If your intentions were bigger than your wallet this year, there is a good chance some of those gifts were left unused. Instead of holding on to unused purchases, take them back to the store and use the refund to pay down your credit card debt.
• Learn from last year: If you know that you will suffer from a holiday debt hangover, now is the perfect time to learn from your mistakes. Pull out your receipts, bills and bank statements to see where you overspent. Figure out how to avoid repeating that mistake again.
Jeffrey Schwartz is the executive director of Consolidated Credit Counseling Services of Canada and president of the Credit Association of Greater Toronto. Consolidated Credit is a national non-profit credit counselling organization that teaches consumers about personal finance. Visit www.consolidatedcredit.ca for more information on credit counseling, debt management and budgeting.