For majority of the Americans, holiday debt is just a part of the season. Along with decorating X-mas trees, exchanging gifts among your loved ones and building snowmen, these days most of the Americans are willing to fold debt into their traditions. In fact, according to a study by Lexington Law, 57% of American adults with children say they’re willing to take on debt in order to make their children happy. This year, holiday debt will linger longer for middle-class families compared to the other income groups, as per a recent research by Nerd Wallet. Little do they realize that lingering debt can hurt family finances and yet there are many people who simply get caught up in the emotional tug of war between gift-giving and getting lured by the one-time deals.
As per analysts, a bargain isn’t always a smart purchase if it compromises the overall financial health of a person. All those consumers who take on debt over the holidays end up paying extra amount on it in the New Year and hence they start off the year with debt hanging over their heads. Did you know that there are still so many people in 2014 who are struggling with debt that they incurred during the holiday season in 2010 or even before that? Taking out debt consolidation loans might be a temporary way out, but what is the ultimate solution?
6 Vital tips to restrain your expenses during the holiday season
Fortunately, it’s not always that the holidays have to end with a mountain of debt. A mixture of healthy restraint, savvy shopping and strategies for finding out extra cash can help you step into a New Year with that happy post-holiday glow sans regrets about debt. Here are some tips that will help you prepare yourself.
- Set yourself a frugal budget: Take a close look at your savings and see how much money you can afford to spend in this holiday season. Then, you should go forward to make a list of your gift recipients and calculate how much you can spend on each person. When you’re creating a budget, make sure you stay on the target and don’t exceed it.
- Devise a holiday spending plan: Remember that your spending plan should include everything that you plan to spend your money on. They may include gift purchases, lodging, travel, restaurants, and parties and so on. Take a look at the final number. If it surpasses your budget, watch out for ways to get rebates and discounts or else trim down your expenses. How about cancelling the hotel reservation and staying with your friends in the area? Opt out of expensive restaurant outings and look towards a more affordable option.
- Prefer meaningful gifts over pricey ones: There are people who often appreciate thoughtful gifts that focus more on experiences, memories or quality time spent with loved ones. You can certainly make a scrapbook commemorating the milestones of your family throughout 2014. You can also create a coupon book for your gift recipient, offer help in different ways that will make life easier for them. This could mean anything from cooking meals, cleaning their car or even setting up their website.
- Plan out a gift exchange: When you’re already on a tight budget and you need to save your dollars, why not plan a family gift exchange instead of everybody buying gifts for everyone this year? This way, instead of purchasing smaller items for each family member, you can also splurge on just one person due to the financial flexibility.
- Host a potluck dinner: You might be used to cooking an elaborate meal for a huge family gathering. You can still offer a turkey or whatever other centrepiece your tradition calls for. But this year, since you aim to save money, you should take a load off and trim down your expenses by asking everyone to bring different dishes and beverages that can be shared among all.
- Place online orders ahead of time: Shopping online and getting your purchases shipped right at your doorstep is indeed a great way to avoid spending your time. You can avoid the traffic, the crowded malls and shop through the e-retailers even by comparing prices. But if you make the mistake of waiting until the last minute to place your orders, you will be the loser. Shop ahead of time to get discounts.
If you’ve tried out everything to trim down your holiday spending and yet it exceeds your budget, take some time to think about the other parts of your life where you can spend less. Curb the habit of eating out often with friends and family members. Opt for home movie nights rather than theater outings. Go for romantic walks instead of spending on dear concerts. Get creative about saving and consider freedom from holiday debt as the best gift to give yourself in 2015.