How to Avoid Holiday Debt

Nothing is worse than having a wonderful holiday season, but then starting the New Year with debt from Christmas. Some of you haven't paid off the previous Christmas before you went into debt for this Christmas.

Here are some tips to get you out of this vicious cycle.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• Cash
• Debit Card
• Family Support
• Creativity

1. First, realize that not all gifts have to be bought at the store. I know you've heard this before and holiday sales are fun, but I know you're more creative than that.
   
   Most people you'll be giving gifts to would rather have something personal and unique to them than something that can be bought at the store.

2. Look for ways to gift and experience rather than just another object.
   
   For example, could you gift a spa experience? A night of babysitting for a couple with a newborn so they can get out of the house? A donation to someone's favorite charity?
   
   These are just a few ways to give without having to go to the store.

3. Consider making a gift.
   
   Use your talents to offer your gift recipients something truly special. If you're a photographer, there are hundreds of gifts you can make from photos. Similarly if you are an artist, designer, scrapbooker, musician, whatever. Whatever your talent is, find a way to make it a gift for your loved ones. It will be truly unique and something extra special to be cherished.

4. Use cash and/or your debit card when you do have to pay for something.
   
   I bet you were expecting to see that first. But the thing is that I would rather you get creative before you head to the store. But when you do head to the store, use only cash or your debit card.
   
   An even better idea is to use a prepaid Visa or MasterCard, such as the Rush Card, to pay for your gift purchases. When you use a card like this, you can keep loading the card all year long to be sure you always have money for gifts no matter the occasion.

5. If you find that your family is so big and you've been overextending yourself to buy for extended family, consider great holiday cards for extended family or gift cards. While they may not be the gifts people normally get from you, your commitment to your financial well-being it very important and, hopefully, your family will understand that.

6. When you have finished your holiday shopping, total up how much you spent and figure out if that is how much you want to spend next year. Now matter how much you plan to spend next year, break it down into monthly amounts so that you will have the cash when the time comes.
   
   For example, the average is somewhere around $800. So, if you want to spend $800 next year and you want to have the money by November, you'll want to divide 800 by 11 months. That means you would need to set aside about $73 per month to get to that $800.

Tips & Warnings

• Get creative with your gifts.
• Not all great gifts come from the store.
• Consider limiting your gift giving to immediate family.
• Pay cash for your purchases.
• Budget for next Christmas.
• Establish a prepaid card or separate account just for gift purchases.
• Resist the offer to open a store account just for the one day discount. The interest rates aren't worth it.
• Leave your credit cards at home when you do go shopping to resist temptation.

Resources

• Personal Shopper and Stylist
• Rush Card

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on 12/2/2008 Great tips. Overspending for the holidays can be a huge mistake.

[Missikae]

on 12/2/2008 Great advice. Thank you!

[bward515]

on 12/2/2008 Great article, especially the only using debit cards and cash. Credit can kill you during the holiday season. Especially with the economy the way it is.

[renee82]

on 12/2/2008 Excellent article! This is definitely a must read article for anyone that want to avoid their bills piling up after the holiday season.

[smdivin]

on 12/2/2008 Great article! This is so going to come in handy for me! lol