How to Avoid Overspending this Holiday Season
For some shoppers, the upcoming holiday season may lead to significant credit card debt. Meanwhile, some people are still paying off debt from last year’s gift buying.
The Reality of Holiday Debt
A recent holiday spending report by NerdWallet found that 28% of shoppers who used credit cards have not paid off the presents they purchased for family and friends last year. The stakes are higher in 2024, with credit card debt already at $1.14 trillion. Furthermore, spending between November 1 and December 31 is expected to increase again to a record total of $979.5 billion to $989 billion, according to the National Retail Federation.
The Cost of Credit Card Debt
It’s not just the holiday shopping season that’s concerning. Credit cards are one of the most-expensive ways to borrow money, with the average credit card charging more than 20% – near an all-time high. This means that shoppers may spend $1,778 on average, up 8% compared to last year, Deloitte’s holiday retail survey found.
How to Avoid Overspending
It doesn’t have to be that way, said Howard Dvorkin, a certified public accountant and the chairman of Debt.com. "There’s no magic wand, we just have to do the hard stuff," said Candy Valentino, author of "The 9% Edge." Mostly that means setting a budget and tracking expenses.
How to Save on What You Spend
Valentino recommends reconnecting funds from other areas – by canceling unwanted subscriptions or negotiating down utility costs – to help make room for holiday spending. She also advises starting your holiday shopping early to take advantage of early deals and discounts or trying pooling funds among family or friends to share the cost of holiday gifts.
Tips to Avoid Overspending
- Set a budget and track expenses
- Reallocate funds from other areas
- Start holiday shopping early
- Pool funds among family or friends
- Avoid temptation by staying away from the mall and unsubscribing from emails
- Consider alternative gifts, such as a charitable donation or making something yourself
Conclusion
Overspending during the holiday season can lead to significant credit card debt, but by being mindful of your spending habits and following these tips, you can avoid financial stress and enjoy a more fulfilling holiday season. Remember, it’s the thought that counts, not the price tag.
FAQs
- Q: Why is credit card debt a concern during the holiday season?
A: Credit cards are one of the most-expensive ways to borrow money, and the average credit card charges more than 20% – near an all-time high. - Q: How can I avoid overspending during the holiday season?
A: Set a budget and track expenses, reconnect funds from other areas, start holiday shopping early, and pool funds among family or friends. - Q: Are there any alternative ways to show my loved ones I care?
A: Consider making something yourself, such as cookies or a candle, or making a charitable donation.
