The holiday season is upon us again, with Black Friday and Cyber Monday just a few weeks away. The holiday season, and Black Friday in particular, are designed to get Americans to spend as much money as possible. This year, the COVID lockdowns will change the way people shop for the holidays. The doorbuster shopping events won’t happen this year – everyone will be shopping from home.
Shopping online can be more dangerous for your debt situation, since you’re not physically at the store and paying attention to the prices of the items you’re buying. Plus, credit cards give you the illusion that you can spend more money than you currently have, so many Americans fall deeper into debt during the holiday spending season. Making matters worse, gifts bought on credit cards end up costing far more than if you paid cash, once you factor in interest rates and finance charges. There’s also the fact that if you max out your credit limit, your credit score will drop.
Once the holiday season is over, the warm fuzzies disappear, and you’re left with even more debt. This year, we thought we’d share a few holiday spending tips to help you avoid over-spending, and hopefully help you avoid any more debt. Once you realize that Black Friday is specifically designed to get you to spend more money than you planned on spending, it’s easier to avoid the holiday credit card blowout.
So here are our six tips to avoid holiday debt:
1. Skip the stores and shop online
Some of you might be thinking it’s a better idea to shop at the store, since most people will be shopping online. Don’t fall into that trap. Nearly every Black Friday sale is available for online shopping now, so you don’t need to go to the store to get a deal. If you’ve set your budget and locked down your list, you can shop online and get exactly what you need quickly… and you’ll completely miss the big displays and surprise doorbusters that are designed to get you to spend extra money.
2. Save up and pay cash
Spending cash instead of using credit cards is obviously the best way to avoid holiday debt – but that’s harder when you’re doing your shopping online. Instead of buying everything with the hope of paying it off later, you should save up and only spend what you’re able to immediately pay off. If you haven’t started saving already, it’s not too late. Put as much aside as possible from your next few paychecks and skip the Black Friday sales. You might miss out on the virtual doorbuster sales, but if you wait until closer to Christmas to make purchases you can pay off in cash, you’ll come out ahead.
3. Be like Santa and make a list
Make your list, and then check it twice like Santa. If you plan out who you’re buying for, and what you’re buying, you’re less likely to click on those impulse buys and end up with things you didn’t mean to buy.
4. Set your budget before shopping
When you’re making your list, figure out what you’re actually able to spend, based on what you’ve saved up. If you plan your purchases based on a budget that you can afford, you’ll keep yourself from overspending. Sticking to a strict budget will help you avoid the unplanned but exciting doorbuster deals.
5. Avoid layaway programs
Layaway programs have evolved, and the fees are much less than they used to be. Sometimes, you can even find free layaway programs… but no matter what, there’s always a cancellation fee if you change your mind about your purchase. If you decide not to buy several items, the cancellation fees can add up quickly, and you’ll end up spending money on presents you don’t even buy.
6. Skip yourself this year
You can shop for yourself all year long. Don’t get roped in by the crazy holiday shopping deals, there are plenty of other great sales through the year. If you don’t buy anything for yourself, you’ll end up spending significantly less this holiday season.