The holiday season is a time for celebration, and giving, but it can also lead to financial stress if not managed wisely.
The charm of holiday décor, presents, and get-togethers can easily give way to financial strain.
It was recorded that during the last holiday, 69% of Americans were struggling to take on debt in order to pay for their expenses, while 36% could not even afford to buy gifts.
Our best advice is compiled here to help you enjoy the holidays responsibly and without going over budget. Have a clear head and a healthy wallet as you enjoy the celebrations.
How to Avoid Holiday Debt with These Tips
Look at the simple ways to enjoy holidays without breaking the bank;
1. Determine the True Cost of Your Vacation
With the cost of goods rising and the economy becoming more difficult by the day, you might be left with little cash for additional or impromptu gifts.
Make a list of everything you need to buy for the holidays in advance to help you minimize financial stress.
This keeps you from going over budget and keeps you organized. Refrain from doing unnecessary things or giving gifts that will cost additional money.
2. Create a Budget and Monitor Your Expenditure
Decide how much you can afford to spend before you take that vacation. Ensure that you have a list of everything you want to get, it could be tickets to events, travel, and everything else that you can’t buy at the moment.
Compute the entire expense and know the total of it. For items that are not important remove it from the list and allow the important ones if your spending exceeds your budget.
Despite being a solid starting point, making a budget is meaningless if you don’t follow it. Keeping a spending record of all your purchases will help you avoid impulsive purchases and stay within your spending limit.
3. Set Your Limit
In line with what was previously said, ask yourself, what is the true cost of your holiday expenses? That is the first step. Then you can also ask again what you want to spend your money on based on those price tags.
This may entail giving some items more importance than others. For instance, you may decide to spend more on family vacations and less on social gatherings or décor.
Establish your spending limit once you’ve determined how much you feel safe spending and have that amount in your bank account. To prevent overpaying, be sure to adhere to this spending cap.
4. Take Advantage of Sales and Coupons
During the holidays, many stores offer discounts, particularly on Black Friday. If you have anything you really want, wait to see whether it goes on sale.
To save even more money, look for discounts and promo codes online or in your neighborhood newspaper.
5. Track Holiday Spending With an App
It might be difficult to keep track of your expenses when you shop at departmental, boutiques, and malls.
When you are not thinking straight. Turn on the mobile alert feature on the app associated with your credit card before you leave.
The company will send you real-time buy notifications to your device, allowing you to keep an eye on your purchases as you go.
Using a money management tool that notifies you by pinging you when you approach your budget is an additional option.
6. Charge and Pay
Credit cards offer more benefits than just convenience and security. As you make charges, you will accrue money, points, or miles if your accounts offer a rewards program.
But when your card has a large limit, it might also be tempting to overspend. Remember that you are borrowing money and you need to pay it back.
7. Sell Things and Use the Money to Shop
It is quite possible that you can avoid using up all of your credit cards or spending a penny of your funds during the holidays.
Now take a look around your house and yard. You may likely discover a few assets at least that you can sell online. Check out your house and yard right now.
You’re likely to come across a few valuables that you don’t need but can sell online via an app. The amount of money you can make could surprise you.
8. Use the Points on Your Credit Card
Sell things and use the money to shop, check to see how much you can get started with.
A good Apple iPhone 13 pro max that is in good condition can save roughly $800 in your pocket. One of the easiest ways to avoid going into debt is to save money before the holidays.
If you are short on funds, consider taking up a second job or looking for other sources of income.
This will help you avoid holiday debt and help you make additional money for seasonal shopping.
9. Lower Your Gift Giving Budget
Overspending might lead to feeling pressured to purchase the ideal gift. Have a rethink. Get creative to reduce those costs instead.
Alternatively, give handmade ornaments, scrapbooks, or baked delicacies to your loved ones.
10. Redeem Your Credit Card Rewards
You may want to use cash or a debit card linked to your bank account to make all of your purchases rather than using credit cards.
That is acceptable and will ensure you do not incur any debt. Cash back balances can be used to buy gift cards that you can spend throughout the holidays or they can be sent to your bank as a deposit.
If your cards offer rewards as points or miles, you can usually trade them in for cash or gift cards, too, though the best value is typically for travel.
11. Steer Clear of Apps
Without taking out a traditional personal loan, buy-now, pay-later applications make it simple to buy things today, even if you don’t have the money to pay for them.
Though they can be enticing, buy-now, pay-later applications are just another way to rack up debt during the holidays.
12. Charge on a New Card and Win a Bonus
This may be the perfect time to open a new cash-back credit card that offers a high sign-on bonus.
The business will provide you with money after charging a specific amount within the allotted time. As long as you don’t carry over debt, you’ll have a net gain.
The American Express Blue Cash Everyday® Card is only one illustration. After you charge $2,000 throughout the first six months, you will receive a $200 statement credit from it.
Think about how a bargain such as this could benefit you. Perhaps you have a spending limit of $700 on holiday purchases.
After charging those purchases, settle the balance in full. Even though you still need to charge $1,200, you discover after looking over your budget that you spend that much on groceries over three months.
Once you pay off the balance on your new credit card, you will receive the $200 bonus.
How Do You Resolve Bad Debt?
Bad debts are typically written off by the debtor because they are difficult or impossible to collect.
Before designating a debt as being bad, a business or lender will often have undertaken some measures, such as internal and external collections or even legal action.
Bad debt recovery is the process of collecting a debt that has been written off and is either fully or partially repaid.
A bad debt may be recovered by the debtor by agreeing to settle the debt for a lesser sum or by receiving payment from a trustee in bankruptcy. If an asset that was used as collateral is sold, a bad debt may also be recovered.
The holidays are almost approaching. Would you continue to make debt payments after celebrating?
Maintaining your financial security is crucial to bringing the happiness and tranquility of the holiday season into the new year.
Learn how to avoid holiday debt with these tips, this way you can enjoy yourself without having to worry about debt hanging over you.
