Stop Holiday Debt Before It Starts

Read financial expert Jean Chatzky's advice against creating holiday debt today — that's right, before you go out for those last-minute gift impulse buys!


Ah, the holidays…they bring food, friends, family, parties, and unfortunately, for a lot of people, they bring a great deal of debt. According to a recent study, 13.5 million adults are still paying off their holiday debt from last year. Take a look at my tips below for ways you can stop holiday debt before it starts and how you can manage the debt that’s still saddling you from last year.

Stick to a budget. I’ve found that most Americans should only be spending 1.5% of their yearly take-home pay on holiday gifts. Why? From what I’ve seen, that’s an amount that people can pay off before February. If you have no idea what you should be spending on gifts, take a look at my handy Holiday Budget Calculator. It will give you an idea of how much you should be using to fund your holiday shopping sprees.

Map out how many people you need to buy for and how much you can spend on each person. Once you have your list and your amounts, stick to them. That means if once you start shopping, if you go over the amount you’ve set for one person you’re going to have to cut back on what you planned to spend on someone else. 

Avoid retail therapy. If you’re in a bad mood and think shopping is going to do the trick, avoid overspending by staying at home. Shop on a different day, and I guarantee both you and your bank account will be happier in the long run.  

Pay it off ASAP. If you are still carrying holiday debt from last year, try to pay it off as soon as possible. Otherwise, your holiday splurges will end up costing you even more than you actually paid for them. For example, say you had a $1,000 credit card bill that you’ve been paying off at a rate of 20%. Those gifts are now costing you an extra $200. 

Cash is king. When you’re doing your holiday shopping, try to pay with cash or your debit card, whenever possible. It’s no secret that interest rates are rising and as I’ve mentioned before, they can make your holiday gifts significantly more expensive than they already are.

Are you sticking to a holiday budget this year? Any tips to share?


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