It’s easy to get caught up in the spirit of the holiday season and throw financial caution to the wind. But chances are, come January, you’ll find yourself facing a pile of debt. With some careful planning, it doesn’t have to be that way. Follow our tips and enjoy the festive season without overspending.
1. Set a holiday budget. Draw up a budget that encompasses the total you can afford to spend on everything and stick to it. Include gifts, cards, postage, wrapping paper, decorations, entertaining, travel, long distance telephone charges and any other holiday expenses.
2. Create a gift list. Allocate a specific amount of money to each person on your list -- you may find you’ll have to cut some people out or lower the amount of money you spend on everyone. If you come from a large family or a workplace that encourages gift-giving, suggest cost-cutting ideas such as drawing names to determine those you buy for, giving gifts only to the children or purchasing only one gift per family.
3. Shop in advance for specials. If you shop early, you may be able to buy last year’s model at a reduced rate. Merchants often slash prices on the previous season’s clothing, shoes and electronic devices. You can also save money for next year by buying decorations, gift wrap and cards when they go on sale at the end of this year’s holiday season.
4. Buy online. Browse the Internet before heading to the mall. Sometimes, companies offer discounts, free shipping and free returns on online purchases. Also, comparing prices online will give you a better idea of the going rate for items before you buy.
5. Leave the credit cards at home. Take the money you’ve budgeted for the holidays out of your bank account and don’t go back for more. Paying for your holiday expenses in cash will limit your expenditures to what you’ve withdrawn, and prevent months of debt repayment after the holidays.
6. Avoid unnecessary debt. If you must use credit cards, pay off the balance as soon as possible to reduce interest charges. Beware of deferred payment plans -- unless you can pay for any items you buy in full at the end of the deferral period, you may be charged a high rate of interest going back to the original date of purchase.
7. Spread savings throughout the year. Keep track of your actual expenses. Once the holiday is over, divide that sum by 12. That’s how much you’ll need to set aside every month throughout the year to cover next year’s holiday expenses.
8. Give home-made gifts. Home-baked goodies always make great gifts. So create photo albums of times you’ve shared or gift coupons that recipients can redeem for your free babysitting, gardening or dog walking service. Save money on gift paper by wrapping items in children’s drawings, comics, old holiday sheet music, glitter-sprinkled tissue paper or placing them inside a reusable container, such as a plastic storage box or pretty dishtowel. And make your own gift tags out of leftover wrapping paper or last year’s holiday cards.
9. Donate to charity. For those on your list that have everything, consider making a donation to a charity they support in lieu of buying them a gift. You’ll be contributing to the true spirit of the season and will get the added bonus of a tax deduction.
10. Save on postage and shipping. Consider mailing cash or gift cards containing magazine subscriptions to young out-of-town relatives rather than spending extra to ship a gift. Or skip the mail altogether by ordering gifts from a catalog or Web site that offers free shipping, and sending out holiday greetings by email.
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