We get it: The holiday season can get the better of your finances. If you rack up a high balance of debt splurging on gifts for family and friends, and even treating yourself, your budget is bound to suffer. Don’t fret though, our holiday shopping guide can help you stay both festive and budget-friendly.
Prevent Overspending During the Holidays
The best way to overcome a high shopping balance is to avoid overspending in the first place.
Here’s how to make a budget you’ll really use.
- Count your cash. It’s not hard to find tips on “shopping on a tight budget,” but any advice is based on the assumption that you know how much you can afford to spend. Check your bank account first and determine how much you can comfortably spend.
- Make a list of gift recipients. List family members, friends, the office gift exchange, and anyone or anything else you need to shop for. Remember teachers or any other people who provide services for you. If you use a house-cleaning service, or visit the same stylist regularly, a holiday tip may be customary.
- Assign a dollar value for each person’s gift. You don’t need to spread your budget evenly, but you should know how much you’re spending on everyone on your list.
- Don’t forget non-gift expenses. Holiday decorations, party supplies, and fancy outfits for your kids add up, too.
Get Ready to Shop, Or Not
Considering going gift-free? You’re not alone. A Deloitte holiday survey for 2017 found that 24% of respondents plan to throw or attend more parties instead of shopping for gifts. Some other non-material ideas to try include:
- Plan a special evening with family or friends. Cocoa and a movie, or a long drive to see lights around the neighborhood, can be a memorable experience “gift.”
- Give a favor. Babysitting, volunteering to take over holiday cooking, or even letting your partner sleep in while you and the kids make breakfast (and clean up!) are thoughtful service gifts.
- Get sentimental. Writing letters or cards, or collecting photos that have special meaning for the recipient, can be more special than giving a store-bought present.
- Let family and friends know they don’t need to shop for you, either. Loved ones on a budget may even appreciate the relief from gift-giving expectations.
Still, if gifts are your thing and you are hitting the stores, either online or in person, stay on track with these tips:
- Check your credit card rewards or cash-back bonus options. Holiday shopping is a great time to redeem rewards. Use your points for making purchases and if there are bonus value options by redeeming rewards for gift cards, you can also give those as gifts or use them to shop. Many rewards credit cards also offer points on purchases, usually totaling somewhere between 1% and 5% cash back.
- Look up warranty options on your credit card. Some credit card companies automatically extend warranties on certain purchases, such as electronics. You can avoid spending more money on a duplicate warranty, and still protect the purchase.
Give Scammers the Slip
Falling for a credit card scam hurts even worse during the holidays. What seemed like a good deal turns out to be a trap to take your money, and you’re left without the gift you’d hoped to share. So much for holiday goodwill. Make sure your gifts end up in the right hands:
- Beware fake online stores. Some scammers create websites that copy real store sites and try to lure you in with too-good-to-be-true deals. Complicated URLs and mismatched products (like designer handbags with Avengers merchandise) are red flags.
- Avoid gift card exchange platforms. These sites promise an unused gift card at a reduced cost. The problem is when the gift card arrives already spent, or doesn’t show up at all. It’s safer to pay full price through a reputable seller, preferably directly from the retailer. (One exception: some credit card rewards programs let you redeem points in the form of gift cards, often with bonus value added. Just make sure you redeem this option through the credit card company’s official website.)
- Dodge coupon code scams with this rule of thumb: A website that requires you to make a purchase or enter personal information to get the coupon isn’t worth the discount codes they’re offering. Thieves may collect your personal details for identity fraud, or sell your phone number to marketers so you end up hammered with calls.
- Watch out for credit card fraud. Some credit scams take advantage of the flurry of purchases around the holidays. Don’t trust a phishing email asking you to “confirm” credit details for a recent (fake) purchase. It may be an attempt to steal your identity.
- Watch out for charity scams. Using cancer-stricken children as a scamming tool is a particularly low move, but it happens. Some thieves set up a plausible name and even a website for, say, the American Kids’ Wish Foundation, but keep donations themselves. Research a charity before you donate to make sure your money goes to the cause you support.
Went Overboard? How to Fix Finances Quickly
During the holidays, the push to shop is everywhere, with sale prices and deals too good to pass up. So despite your planning and budgeting, you may find yourself with too much credit card debt after the holidays. Don’t beat yourself up too much, there are always ways to get you right back on track. The most important step is to pay off the added debt as quickly as you can.
Ideally, you’ll cut spending to bare bones in January and pay off your balances in full. If the debt’s too high, here are your best options to get out of debt faster:
- Return what you can. Did you buy yourself a gift a few too many times or get duplicates? Check out store return policies as there are often time frames on returns. Most importantly, save all of your receipts to ensure you get a full refund on the price you actually paid.
- Tackle debt. Some experts recommend paying off the balance with the highest interest first. Others suggest paying off the smallest balance, then “snowballing” your way up to higher balances. Either way is fine (although the first will save you the most on interest). Pick the method that motivates you to pay as much as you can.
- Look for belated deals. Price adjustment, also known as purchase protection, is a fantastic perk to take advantage of if you can. With this feature, the credit card issuer offers to refund you the difference if there’s a price drop on a recent purchase. Keep an eye on post-holiday sales, and you may get some money back if you’re within the purchase window.
Save early for next year. Search weekly savings plans, or a 52-week savings challenge, and you’ll find tons of ideas to build your savings with baby steps. Some plans start off by saving only $1! It seems strange to save instead of putting every dollar toward your debt, but a smart savings plan will help you avoid the debt trap next time.