The average American spends roughly $900 on gifts during the holiday season, according to a 2016 study by American Research Group, Inc. Add to this, the holiday cards, decorating, baking and holiday dinners, and it can add up to a big chunk of change.
For many families, holiday spending sets them back financially for months to follow if not longer. Credit cards make it easy to overspend leaving families to suffer the consequences later. The problem with credit cards isn't just the monthly payments. It's the long-term cost from accrued interest.
So what can you do to ensure you start the new year without new debt?
First, create a holiday budget. Include not only gifts, food and decorations, but also postage for holiday cards, wrapping supplies and the babysitter for your shopping trip. Once you've listed all your expenses, review it, and decide where you can cut some costs.
Gifts to extended family and friends are an excellent place to start. Talk to those you exchange gifts with, and see if they'll agree to forego the gift exchange or else set a dollar limit. Another option for families or groups is to draw names to reduce the number of gifts everyone has to purchase, or hold a white elephant exchange.
Decide in advance on a gift value for each gift recipient. Let's say you've decided on a gift value of $50 for your sister. Now, rather than buying her something on sale for $50 that's worth $75, stick to the value. Buy something on sale for $35 that's worth $50. This is a good place to shave a lot of expense.
Do you usually send out more holiday cards than you receive? Opt instead for a phone call during the holiday season for those you don't talk to often. It'll cost you nothing and have more meaning. Also, mail cards only to those who send you card.
When's the last time you heard someone complain of a shortage of holiday goodies? Probably never.
Cut back on the baking. When's the last time you heard someone complain of a shortage of holiday goodies? Probably never. Most of us eat far more than we'd like to just because it's there.
Hold potluck dinners rather than playing head chef if you'll be hosting any parties. Offer to provide just the meat. Then ask everyone to bring a specific type of dish to avoid duplicates.
To eliminate the cost of a babysitter, offer to exchange babysitting with a neighbor, so each of you has the opportunity to shop without the kids.
Plan your shopping before you head out. Do research online to find the best deals on those items on your shopping list. If you can't find a good deal on something, consider an alternative. Also, keep your eyes out for newspaper fliers and check the coupon page of the store websites you plan to shop.
If possible, leave credit cards at home when you go shopping to avoid impulse purchases. Many people spend far more than they plan on by purchasing unnecessary "bargains" they just can't resist.
Finally, if you do use your credit card, try to make a serious plan to double or triple the monthly payments to reduce the interest you'll pay and to quickly get out of debt.