Holiday
Debt
6 Ways to Avoid
The wait is over; December is here. You are now free to dive head-first into the holiday season you’ve been eagerly anticipating since last January.
It’s fun to get swept up in the spirit of the occasion — but it’s also easy to get carried away. Whether it’s spending a little extra on gifts from your loved ones’ wish lists, decorating your home or space to perfection, or taking advantage of one too many year-end sales, you can quickly find yourself on the spendy side of the season. In fact, U.S. News and World Report found that 42% of consumers expected to go into debt to pay for the holiday. This means putting more burden on your credit card accounts and often exceeding your ideal credit utilization ratio — an important factor of your credit score.
1. Make a List
And by “list,” we mean budget. Sit down and map out exactly how much discretionary savings and income you have to spend and exactly what or whom you want to spend it on. And don’t forget, it’s not always just about presents and decorations. The holidays can mean eating and drinking out and even extra travel for the occasion.
2. Check it Twice (and
Keep Checking)
As you check off names on your gift-buying list, track your spending along the way so you don’t exceed your credit utilization ratio, that way there are no surprises waiting in your receipts (or in your credit score) after the presents are opened and the wrapping paper is cleared away.
4. Be Nice (But Not
Too Nice)
If you’re worried about a friend or family member outspending you, try having an open discussion with them about setting a price limit. And also remember, expensive doesn’t always mean better — sometimes a simple gift you make or put together with someone specific in mind can mean much more than money.
5. It’s Better to Give…
Speaking of stuffing your own stocking, it can often be difficult to resist spoiling yourself while shopping for great deals on gifts for others. But that can quickly cut into your budget. Instead, if you see something you have to have, you might mention it to your friends as a possible (wink, wink) gift idea.
6. Make a
New Year’s Resolution
After the holidays are over, start thinking ahead to next December. The best time to start saving and budgeting for the season is as soon as possible. And if you can pay down any debt in the spring, summer, and fall, it can help build, rebuild and manage your credit moving forward and relieve you of the stress when the holidays roll around again.
6. Don’t Use All
Your Credit
Keep your credit usage within reason as using too much of your credit can ding your score. Experts recommend to use less than 30% of your available credit.
7. Consider Keeping Accounts Open
This might seem counterintuitive, especially with credit cards and accounts you don’t use regularly. But when you close an account, you decrease your available credit, and that can unintentionally hurt your credit score. So, if you do have a seldomly used or dormant account, it might be better to keep tabs on it through your regular credit reports.
For more on how to build and manage your credit
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U.S. News and World Report found that 42% of consumers expected to go into debt to pay for the holiday.
But there’s no reason to let the holidays wreck your credit and spoil your New Year’s. Here are a few tips to help stay within your budget and avoid debt this year — and for years to come.
3. Don’t Be Naughty
Stick to your budget. If you find the perfect gift someone special or the decoration that will make your holiday display that costs a little more than you expected, make sacrifices elsewhere.
The last advice for enjoying a debt-free holiday is to remember that cliché as it might sound, the best things are usually free — especially the gift of time. Enjoy time visiting with the people you love most. Give the gift of your own time and energy and volunteer with a non-profit or charitable organization to brighten someone else’s day. And don’t forget treat yourself to some relaxing time away from work and responsibility to recharge for the new year ahead.
The last advice for enjoying a debt-free holiday is to remember that cliché as it might sound, the best things are usually free — especially the gift of time.
But there’s no reason to let the holidays wreck your credit and spoil your New Year’s. Here are a few tips to help stay within your budget and avoid debt this year — and for years to come.