Are you a Santa or a Scrooge when it comes to the holidays? If you’re like the average American, you might’ve spent around $780 on Christmas gifts last year. It can be easy to fall deeper into debt during the Holiday Season if you don’t have a specific plan on how much you’re going to spend. Before you go reaching for that credit card, here are five ways to avoid going into debt during the holidays.
Save throughout the Year
A good approach to saving for the holidays involves stashing away money from every paycheck into a savings account designated specifically for Christmas spending. You can start with $25 to $50 from every paycheck into the Christmas fund. This helps pay for all holiday-related items, such as decorations, the tree, Christmas cards, postage, and of course, gifts. Having around $700 stashed away can help avoid the worry of wondering how you’re going to pay for everything, and better yet, helps keep the purchases off your credit cards.
Instill an Emergency Christmas Savings Plan
If you’re thinking there’s less than 10 weeks before Christmas and you don’t have 26 paychecks left to save in a holiday fund, then try what many Americans do: which is to start saving now. By contributing just $50 a week toward your savings goal, you could still amass enough in your savings account to pay for those Christmas gifts.
Start Gift Shopping Now
If the idea of saving between $50 and $100 a week before Christmas seems too daunting, start your Christmas shopping now instead. Sometimes the idea of putting money aside for savings is harder than simply buying physical gifts instead. Take advantage of sales to start setting aside gifts now. Some of the best deals might even come before Black Friday shopping.
Use Credit Card Rewards
If you’re one of the few Americans who can use credit cards responsibly and pay them off in full every month and reap the benefits of credit card rewards, Christmas is the perfect time to cash in on your reward points. You can redeem credit card rewards for gift cards to give to family members, or for gift cards to specific stores where you can then shop for gifts in person with the gift cards.
Limit Your Gift Giving
Let’s be honest—do you really need to give worthless coffee mugs and candles to everyone in your office? Take a good hard look at your gift-buying list and find ways to trim the excess. Instead of exchanging the same old gift basket or box of chocolates with co-workers, how about suggesting a Secret Santa? Maybe ask family to limit the gift buying to the little ones in the family instead? Instead of buying gifts for neighbors, how about making baskets full of home-baked goods?
Think outside the box and don’t be afraid to offer less expensive alternatives in order to reduce your Christmas spending this year. Chances are others will be just as grateful to save some dough.