Holiday Debt Is A Real Thing. Here’s How To Avoid It.
Fall has finally arrived, and that means many people start thinking about the holidays. While the holidays are supposed to be a time for warmth, goodwill, and general cheer–far too often, they become a symbol of stress, anxiety, and debt.
Holiday shopping has become an almost herculean effort. Although online shopping has reduced the physical danger of in-store shopping to a certain degree, it hasn’t done anything to prevent an even more sinister threat: holiday debt.
Each year, for the last three years, Americans have accrued an average of over a thousand dollars in holiday debt. In 2018, that figure was $1,230. Twelve hundred dollars of debt just for Christmas gifts.
There is absolutely nothing wrong with wanting to be generous and buy gifts for friends and family. However, going into debt as a result is counterproductive. Depending on how long it takes to pay off the debt, and the interest rate being charged, some families may end up paying significantly more than the total cost of the gifts purchased.
Avoiding Holiday Debt
If you want to avoid falling victim to holiday debt, there are some simple rules you can follow:
1) Plan ahead of time: Rather than going out and putting gifts on a credit card at the last minute and then worrying about the debt afterward, start planning and saving now. Make a list of all the people you want to buy gifts for, and think about how much you want to spend for each person.
2) Set a “gift budget”: One secret of holiday buying that works for many families is to set aside a specific amount of money exclusively for buying gifts. It doesn’t matter if that amount is $50, $500, or $5,000.
Once you’ve set aside an amount you can comfortably afford, divide it by the number of people you want to buy gifts for. For example, if your gift budget is $100, and you want to buy gifts for ten people, you can spend up to $10 per person.
3) Consider alternative gifts: If you don’t have any room in your budget to buy gifts this year, consider alternatives rather than going into debt. Homemade gifts are becoming more popular these days, and are often more appreciated. If you can craft, build, bake, create, or otherwise produce something to give, it can save you a lot of money.
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