It may be hard to believe, but the holidays are just around the corner and all that travel, gift giving, party throwing and decorating is about to go into full swing – as are the expenses that come with all that merry making.
Sure, you can just charge everything to your credit card over the next few months and worry about how to pay down your debt once January rolls around, but that may not be the smartest idea, especially if your credit card carries a high annual percentage rate (APR). Properly managing your debt today can help you reach your future financial goals more easily, and possibly even sooner.
With that in mind, we’ve put together a list of ways you can avoid a mountain of holiday credit card debt this year while still having a wonderful time celebrating with friends and family.
Let’s take a look at five things you can start doing now to prepare for holiday expenses.
1. Review & Revise Your Budget
If you have a monthly budget, now is a good time to see if there are ways to free up some extra cash for the holidays. Could you do without Netflix for a couple of months? Cut back on eating out? Pack your own lunch and brew your own coffee until the end of December? It’s amazing how much money you can save by cutting out some of the nice-to-haves now and putting that money into a savings account for your holiday spending.
If you don’t have a monthly budget, it’s a good idea to consider creating one. It doesn’t have to be complicated, but it should track your income and spending so that you have a firm grasp on where your finances stand.
2. Pay Down Existing Debt Now
You could also use that money to pay down any credit card debt you may be carrying so that you don’t keep paying interest on it as you make new purchases. There are a couple of tried-and-true approaches to paying down your credit card debt that you could implement now. Not only will reducing your credit card debt help you save money on interest, it can boost your credit scores, meaning you could qualify for better, new credit. You could even …
3. Get a 0% Introductory-Offer Credit Card
If your credit is in good shape, you could potentially qualify for a credit card with no interest for balance transfers and even new purchases (here’s how you can choose the right balance transfer card for you). That means you could pay off your high-interest credit card debt if you have any, make your holiday purchases, and then spend 12, 18 and sometimes even 21 months paying down that debt without accruing any interest charges.
4. Look Into Layaway
If your credit’s not so hot, a new credit card may not be an option for you, but that doesn’t mean you can’t take advantage of paying for your holiday purchases – especially gifts – with incremental payments. Lots of stores offer layaway options that allow you to start paying now for holiday gifts that you will pick up and pay off in full right before the holidays. Layaway can really help take some of the sting out of holiday gift giving.
5. Get Creative
Saving money on your travel, gifts, parties and even food is a great way to make sure you don’t rack up more debt than you can handle. You can start thinking now of ways you can keep these costs low. Can you drive over the river and through the woods to grandma’s house? If so, it’s probably cheaper than flying, even if it does take a bit longer.
If you have a big family, you could suggest a name draw for any holiday gift giving. Rather than everyone feeling obligated to buy everyone else a gift, a name draw can mean giving nicer gifts while still keeping everyone’s costs down. You could also consider using your creative skills to make gifts for your loved ones.
Remember, the easiest way to avoid the stress and potential credit damage that debt can cause is to keep your spending in check and not rack up big debts in the first place, especially on credit cards. Doing so can help ensure your holidays are merrier and brighter without that looming shadow of debt creeping in to spoil the fun.
[Editorial Disclosure: PayDownMyDebt.com is a service that provides people with tools to pay down their debts through automatic payments. The purpose of this article, however, is not to encourage users to purchase that service. This article is educational and journalistic in nature and aims to help people learn how to pay down their debt, whether they use our site, another, or go it alone.]