The holidays are a time of good spirits, familial warmth and charitable feelings. But as you know, they also can come with a lot of spending. Between travel, gift buying, charitable donations and other winter-time indulgences, the holiday season can put a big old dent in your finances. Read on for some tips on how to tackle holiday spending without abandoning your financial good sense.
Set a plan
Holiday shopping can be a frenzy to the finish. While spontaneity can be great, it could also take a toll on your finances. Instead of wandering around the mall on December 20th, prepare yourself ahead of time. Decide early on who you would like to buy for and how much you can spend. Similarly, it's a good idea to set a budget for how much you can spend on other holiday expenses, like travel, donations, fancy meals or other entertainment.
Here's another reason not to wait until mid-December: things tend to get more expensive the longer you wait. Ever try to buy flowers on Valentine's Day? Surge pricing is real, and it can hurt.
All sorts of gifts, like jewelry and television sets, could come at a premium at this time of year. If you wait until the last second, too, you won't have time to shop around for the best deal. So start early, shop around online and see how inexpensively you can get what you need. If you buy in November, you should still have plenty of time for those gifts to ship out to you without paying a premium to get them that day.
Choose your payment methods wisely
Once you've finished making preparations, it's time to make the nitty-gritty decisions. How are you going to finance all those thoughtful gifts?
If you can, it usually makes sense to do your spending with rewards or cash back credit cards. Why? Because you're going to be doing that spending anyway, so you might as well get something back for it. Choose a card that targets the type of spending you plan on doing, and salvage some returns for all your seasonal largesse.
Beyond cashback, points and other credit card benefits, you should also keep your interest rates in mind. If all that spending is going to result in some leftover credit card balance, you'll probably want it on a low- or no-interest card so that you don't end up stuck with too much debt.
Make a repayment plan
Like we mentioned earlier, the best option is to budget and stay within your budget. If you end up in debt, though, you need to be prepared. A good practice is to make a repayment plan so you have a set goal for when you'll be credit card debt-free. Keep in mind that unless you used a no-interest credit card or paid off your full statement balance, you should expect to pay back a larger amount than you initially saw on the cash register.
You may also want to decide on some expenses you can cut back on in January and February in order to finance your previous spending. If the debt you've racked up comes with a high interest rate, you could consider transferring your balance to a low- or no-interest credit card. If you're paying off debts on too many cards to comfortably keep track of, you could also consolidate your balances. Going into debt over holiday spending is just like packing on a few extra pounds at Christmas dinner - it'll take some time to work off.
Before you start repaying, check out our debt repayment calculator to help figure out how long you might be saddled with this extra bit of debt. While you repay your debts, you can keep track of your progress using Credit Karma's My Spending feature. There, you can connect your cards directly to your account to see up-to-date balances and spending activity.
Remember your purpose
With all that said, let me get mushy for a second. For those who celebrate, the holidays are actually about love. Love for your family, for your significant other, for your pets, for humankind, for yourself - that's what the holiday season should be all about. If expensive jewelry, a new car or an exotic trip aren't in your budget, don't fret. Figure out something more simple -- maybe something that you don't even have to buy -- and give that to your loved ones instead. You'll save money that way, and you'll still have all the warmth and good feelings of the holiday season.
Similarly, keep in mind that all the great things about the holidays actually exist year-round. If flying out to see mom and dad is prohibitively expensive in December, you could always consider going in March. You'll still be family then, too.
If you give gifts, travel or otherwise indulge over the holiday season, then it's recommended to get prepared beforehand. Beyond all that peace, love and kindness, add a little common sense and foresight to the mix to make sure you emerge from the holiday season in the best shape possible.
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