For many people, it’s just not the most wonderful time of the year without a tour of the town’s holiday light display, a tree-trimming party, or the looming shadow of credit card debt. Okay, if that last item seems like a bit of a record scratch moment, think about it. The holiday spirit doesn’t come cheap: There are the gifts for all your extended family members (and wait, didn’t your cousin just get married? That’s an extra gift right there). The white elephant parties at the office. And the decor, since the house isn’t going to turn into a winter wonderland through magic.
Most people never consider these 5 financial moves — and they’re leaving thousands on the table.
All of this holly jollyness costs money, so it’s not uncommon for revelers to go into debt as the new year approaches. However, spending the first half of the year digging yourself out of a financial hole doesn’t have to be as inevitable as your great uncle’s fruitcake.
As the president of the Financial Counseling Association of America (FCAA), Martin Lynch knows a thing or two about helping people get out of debt — or avoiding it outright. He says there are ways to avert a candy-cane coated debt crisis, and some of them are easier than you might think.
Lynch spoke with GOBankingRates about what you can do to keep yourself out of debt and make your finances merry and bright this holiday season.
Get a Budget in Place
Just as Santa Claus writes up his list of the naughty and nice, you’d be wise to draft a list of your own, focusing on which expenses you should prioritize and which ones get a lump of coal. In other words, have a general sense of how much you can spend without shorting necessary expenses like your bills or retirement fund.
Does that sound like it’s taking some of the fun out of the holiday? Perhaps you have to think about it in more basic, even stark terms. Lynch encourages you to ask yourself whether you could afford to let your emergency fund go without being replenished for a few months. If the answer is no, then you’ve got to make like Ol’ Saint Nick: Grab yourself a glass of milk, a plate of cookies, and start your list.
Set Limits on Purchases
Yes, this step might be hard, especially if gift-giving is your love language. But if you want to avoid going into debt, you’re going to have to set some hard limits about who you buy for and how much you spend on them.
This approach doesn’t mean you have to be a Scrooge — far from it. Lynch suggested that larger families could adopt a Secret Santa approach to gift-giving, where everyone is only responsible for finding a great gift for one person, instead of raiding the department stores to get something for everyone.
Though online shopping has rapidly become as associated with the season as Rudolph’s red nose, there are some benefits to hitting the brick and mortar stores — specifically, the ability to adopt a cash-only approach that helps you mitigate your spending and keeps your credit card in your wallet.
That said, if you do feel an overwhelming urge to spend, Lynch suggests keeping the amount reined in to something you can pay back within a month or two. After all, you don’t want to be still in debt from Christmas by Memorial Day.
Don’t Get Pulled in by Sales
While Black Friday and Cyber Monday and Wafflemaker Wednesday (okay, technically, we made that last one up, but you get the point) are smart strategies for retailers who want to lure in customers with promises for the latest and greatest sales, do they actually benefit shoppers like you? Not as much as you might think, according to Lynch.
“Announcing that there are great deals on these days, it’s one of those things that trades on the idea of scarcity, as in ‘you better get it now or you won’t get the same good deal twice,'” he said.
Simply put, people who fear that they’ll be missing out on the best deals are primed to buy more, even if that means going into debt. But Lynch wants you to take a deep breath and get strategic.
“There are plenty of reports about how the deals on Cyber Monday would have been available the Monday before,” he added.
Get Creative About Gifting
Despite the blitz of advertisements you’ll see, making you feel as though the holidays just aren’t merry unless you can have a car with a bow in the driveway or the most elite gaming console under the tree, the real reason for the season is to gather with friends and family. And you don’t need to be a big spender to show off your big heart full of love.
Lynch shared that opting for family time together, or performing acts of service for a friend, can be just as meaningful as any bauble or gadget. Giving the gift of time or a helping hand is often more memorable and useful than the latest iPhone.
You finally hit your $50,000 savings goal — do these 3 things next to keep growing your wealth.
Unlike the steady drone of pop song carols (here’s looking at you, Mariah Carey) in every department store, debt doesn’t have to be a part of your holiday. But if you do find yourself in debt heading into the season, just know that resources like the FCAA exist to help you get out of it — without judgment. And a clean financial record may be the greatest gift you can give yourself.
More From GOBankingRates
- How Middle-Class Earners Are Quietly Becoming Millionaires -- and You Can, Too
- 5 Easy Side Hustles You Can Start From Your Couch (No Experience Required)
- 5 Financial Steps Most People Never Consider -- and It's Costing Them
- 6 Clever Ways Retirees Are Earning Up to $1K Per Month From Home
This article originally appeared on GOBankingRates.com: Holiday Debt? Not This Year. A Debt Specialist Shares His Must-Know Strategies
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
