Healthy Living

5 ways to avoid holiday credit card debt

We may not like it, but the holiday shopping season is soon upon us. Many love this time of year because of the changing leaves and fall festivities. However, it also brings with it gift-giving to family and friends, which makes it an expensive time of year for many.

The National Retail Federation (NRF) reports the average family spent just under $1,000 in 2016 on holiday items – from gifts to special meals. Such a big expense can be overwhelming for many, often leading to unwanted credit card debt come January. Here’s how to save on your shopping, still give great gifts and avoid the nasty debt hangover come next year.

Exchange Lists

Buying a gift for a hard-to-shop for family member can be frustrating. You don’t know if they will like the gift and, worse yet, you risk overspending. If you have several people like this on your shopping list, it becomes that much easier to blow your holiday budget.

“Don’t just budget. Exchange lists. Economists have shown that 20-30% of holiday spending is wasted guessing what the recipient wants and then giving someone a not-quite-right gift. One of the best ways to make your dollar go further is to get their wish list and stick to it,” says Andrew Swick, Founder of CheckedTwice. Exchanging lists with friends or family members may feel less personal, but it’s a great practical way to try and avoid debt throughout the season.

Go Homemade

As the saying goes, it’s the thought that counts. With that in mind, a great alternative to a store-bought gift is the DIY gift. Not only can DIY gifts have more personality than a stale, store bought gift, they are often considerably cheaper.

Jim Wang, Founder of Wallet Hacks, shares his favorite homemade gift to give, “My personal favorite is to get a simple Ball jar and fill it with all the ingredients you need to make cookies (minus the wet items like eggs, vanilla, milk, etc.). Get some twine, tie a handwritten recipe card, and you have yourself a nice gift anyone would love.” Timothy Wieldman, D.B.A., PHR, SHRM-CP and Doane University Professor shares a similar story of he and his wife making homemade candy while in graduate school, “The ingredients were fairly inexpensive, so our major ‘expense’ was the time it took to cook up batch after batch.”

The homemade item doesn’t need to be edible, of course, the sky is the limit. Use your skills and put some thought into what the recipient likes and you’ll be amazed at how they love the gift, and at a fraction of the cost of a store-bought gift.

Try the 4-Gift Rule

The 4-gift rule has been popular on the Internet for a few years. As the name implies, you buy the person four gifts using the 4-gift rule. Those gifts are:

• Something they want
• Something they need
• Something to wear
• Something to read

The 4-gift rule was originally meant to use for buying gifts for children though it can also be used for adults. Regardless of who you use it for, you can customize it to their interests or needs – allowing you to stay on budget with a mix of practicality and creativity.

Use Apps to Stack Your Savings

It seems as though every store has a sale going on during the holiday season. Using savings apps is a great way to cut through that noise and get cash back for your shopping.

It works like this. You use an app like Ebates, Ibotta, or Swagbucks and when you buy something through their rebate portal, you get cash back for that purchase. The amount varies by store but is often in the 5-10% range.

You can increase those savings when you use a cash back credit card for that purchase, effectively allowing you to stack (or increase) your savings. While the savings can be nice, just make sure not to overspend on your credit card as it’s not worth the cash rebate.

Set A Dollar Limit

The simplest, yet most effective, way to avoid credit card debt this holiday season is to set a dollar limit per recipient. This is easier for young children, but may be more sensitive for adult friends or family members.

If you’ve exchanged gifts in the past and are potentially scaling back, make sure to discuss it with the person prior. Be honest with them and explain you’re trying to avoid debt, so they’re not unexpectedly hurt. You never know, they may have been wanting to do the same thing but didn’t want to risk hurting your feelings.

The holidays are a fun time of year. With a little work, you can give great, thoughtful gifts without suffering from the holiday hangover come January.

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