Stay Debt Free During the Holidays

The holiday season is a difficult time for many people to stay on budget. Even those individuals who are generally cost conscious often find themselves over their heads in holiday debt. Unfortunately, the effects of this spending often linger far after New Years Day has passed. January is when the bills begin to trickle in accompanied by a single question. How am I going to pay for this?

The effects of the debt can range from person to person. However, for an individual who is already living under the burden of high credit balances, this can put them over the top into severe financial difficulty. People begin missing payments or using one credit card to pay another. Other people make the minimum payments and get squeezed by interest rates that can reach over 20%. Over the course of several years this can cost an individual hundreds or thousands of dollars without reducing the principle amount. The best way to prevent these negative consequences is to stay out of debt during the holiday season. Because this is often easier said than done we would like to offer some practical saving suggestions.

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• Shop for deals year round. You may find that perfect gift a lot cheaper in July than in December. Be on the lookout for potential gifts all year round and then save them for the appropriate moment.
• Create a list. Before the holiday season hits sit down and create a list of everyone you need to buy for. Make sure and note any gifts that you have already purchased for them throughout the year (tip # 1). Determine in advance how much you can honestly afford to spend on each person, and stick to it. Think of gift ideas before you go shopping. People who go to the store with the intent of browsing generally end up paying more. Remember, browsing often starts a chain reaction that leads to impulse buys and ends with higher levels of debt. Be smart and plan ahead.
• Finish your shopping early. Last minute shoppers usually spend more money because they are under pressure and less likely to consider the cost of a gift.
• Scale back. This applies to food, presents, decorations, activities etc. This not only eases the financial pressure but it also frees up extra time to spend with family and friends.
• Make something. This has become something of a cliché, but none the less it is true that many people are very touched when you take the time to make them a gift. Crafts, baked goods, or a hand written letter are all great low cost alternatives.

The holiday season is a joyful and magical time of year. However, it can also be a dangerous financial pitfall for large numbers of consumers. The potential for spending above your means and running up large credit card debts is an ever present danger. Don’t let this happen to you. The short term pleasure you gain is not worth the long term financial pain.

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About the author:

Mark Carney is a professional consultant with First American Debt Consolidation and Loans, a debt consolidation service specializing in financial education, credit counseling, and debt management services nationwide.