5 Tips for Controlling Your Holiday Credit Card Debt
It’s the most wonderful time of the year – and the most expensive, too! Between gifts, decorations, parties, travel and dinners out, it’s easy to rack up a lot of debt during the holidays. And with inflation still over 7 percent, everyone is paying more for the things they usually buy. If you’re not careful, you could easily double or triple your credit card debt.
According to one article, Americans racked up $1,325 in holiday debt – and the numbers continue to increase year after year. If you’ve been working hard to live within your means, you don’t want to undo your hard work by charging all of your holiday expenses. Likewise if you’re already struggling financially.
Adding to your credit card debt can make it difficult to pay your bills come January. Whether you’ve filed Chapter 7 or Chapter 13 bankruptcy in the past or are worried about having to do so in the near future, let’s discuss five ways you can control your credit card debt during the holidays.
Create a Budget and Stick to It
Spending can get out of control quickly if you’re not careful. To prevent overspending, create a detailed budget and stick to it. Make a list of the people you have to buy for, then write down how much you plan to spend on each one. By doing this, you can determine your total budget and if this is something you can afford. If it’s not, you’ll have to decrease the amount you spend on each person.
Shopping online is a double-edged sword. On one hand, it’s easy to shop and spend money. On the other hand, you can take your time and budget accordingly. You can also compare prices and look for deals. And, you get the added advantage of having everything delivered to your home, cutting down on gas, travel and impulse purchases.
Some people find that it’s easiest to buy gift cards because they can more accurately control how much they spend. We also recommend budgeting early so that you have options to spread out your spending. For some people, it’s more attractive to spend $200 at a time instead of $800 all at once.
Avoid Department Store Credit Cards
During the holidays, big box stores often pressure shoppers into signing up for a credit card. However, these credit cards often come with high interest rates in the 20s, even with good credit. And if you miss a payment, these rates can climb into the 30s!
As you shop this holiday season, avoid opening a retail credit card just to save some money. While 20% off your total purchase might look attractive, you could end up losing money if you don’t pay off your balance in time.
If you really want that discount, the best approach is to open the credit card and pay off your balance right away. Or use a different credit card that offers loyalty points and rewards, and pay this off. This way, you can take advantage of the discount without having to pay a ton of interest – or rack up more credit card debt.
Look for Sales and Coupons
When you start your holiday shopping early, you can take advantage of various sales and coupons, especially on Black Friday, Small Business Saturday and Cyber Monday. If you wrote out a list, look for specific items that might be on sale. Many stores will also price match, so look for these guarantees so that you know you’re buying things at the lowest price possible.
Another way to shop smart is by using a shopping app. This post lists off some of the best apps available for saving money over the holidays, whether it’s by keeping organized, finding the best deals or earning cash back from apps like Rakuten. The savings add up over time and can help you stay on track with your budget!
Grow Your Savings with a Side Gig
Most people aren’t interested in working extra over the holidays, but it’s not a bad idea if you’re hoping to amp up your savings. In order to get extra money into your account, you have to put more money in there! If you’re unable to do this with your current paycheck, a side gig can be helpful.
Keep in mind that you don’t have to stock inventory or work in customer service to make extra money. If you have some time off around the holidays, you can consider babysitting for kids who are off school, walking neighbors’ dogs, pet or home sitting, delivering food for Uber Eats and DoorDash or driving for Uber and Lyft. With all the people traveling, these services are in demand over the holidays!
Think Outside the (Gift) Box
There are some holiday expenses that are non-negotiable, such as traveling to see a parent or buying a Christmas tree. But other expenses are negotiable, so it’s a good idea to think outside the box. If you don’t want to throw away your hard earned money, ask your loved ones what they really want. Maybe they want a small bill paid or an item that you already own.
Even many parents are saying no to toys and yes to experiences. Instead of buying toys for your nieces and nephews, you can take them camping or to the beach. Even though there will be less toys to open, the memories you make will be well worth the compromise! And, you’re teaching kids how to spend their money wisely.
Get Ahead of Holiday Debt
Despite your best efforts, you might still go over budget and rely on credit cards over the holidays. If you can’t pay your balances, get ahead of the problem. There are a number of options for debt relief, including 0% APR balance transfers or debt consolidation. The Law Office of William Waldner specializes in Chapter 7 and Chapter 13 bankruptcy, and we can help you get the fresh start you deserve! Request your free consultation today!