If you were like me, last weekend, you spent way more than you should have for the month and chalked it up to the “holiday season” and pre-buying holiday gifts when the sales are on. From a practicality standpoint, that may make sense, but from a financial one, it may not.
I’m not going to act like scrooge by telling you to not buy things your loved ones (and you) want for the holidays and rain on everybody’s happiness (I do that all year round in my practice). What I am going to do is give you 5 tips for staying out of credit card debt this holiday season.
- Don’t count on money you don’t have today – don’t make your gift list assuming you will get a year end bonus or tax refund (that’s all up in the air!). Set your limits (#3) and make your list (#4) based on money you have NOW.
- Manage the rest of your life – this month is not the time to replace towels, or running shoes or anything else that is not a safety issue and not holiday related. Spread those non-essential, non-holiday expenses over the winter when things are calmer. Or turn those replacement needs into holiday gifts!
- Set some limits – generally families of 4 in an urban area can spend $500-1500 on the holidays including decorations, gifts, clothes related to the holidays and food for get-togethers. Pick an amount that fits your household finances and get other family members to agree.
- Make a list – sounds familiar – but there’s a reason why all those holiday songs talk about making a list. It works. Do not go into a store or online and just buy things that seem okay. Think about what your loved ones want and write it down. This doesn’t mean you can’t be spontaneous, but try not to be ONLY spontaneous.
- Track IT! - It’s not hard. Use a spreadsheet, this Iphone app, this Android one or even a pencil and paper and write down what you’ve bought. Believe it or not, it’s not that much to track and the mere act of tracking it will make your financial judgment better. Stay within the limit you set in #3.
Bonus tip: 'Tis the season to think sustainably financially and otherwise. Reuse décor from last year, make more than you buy, do a Secret Santa, or set a price limit for gift giving. I guarantee a lot of loved ones will appreciate you suggesting a limit. It takes the pressure off.
Try to do the suggestions on my list and you will see that your holidays will be less frantic, riddled with guilt and pressure and importantly, less apt to give you a financial holiday hangover in January. Credit card debt is like walking into a cob web, it takes just a second to get into it and a long time to get out.
Next year, make a resolution to save each month for the holidays. If you need $800 for holidays, save $65/month. You will feel great once December comes. Happy holidays and I will be back in the new year!