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Home › Articles › Holiday Finance › Digging Out of Holiday Debt

Digging Out of Holiday Debt

How to Survive This Year and Plan for Next Year

By Megan L. Fowler

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You can also avoid overspending for the holidays, "...by setting appropriate expectations with children and loved ones and focusing on the non-commercial aspects of the family holiday, so that extravagant spending is not necessary," Chung says. Parents and grandparents can also challenge children to prioritize wish lists and discuss which are the most important items listed and why. "Additionally, consumers can shop smarter by looking for sales, using coupons and comparing prices among various stores," he says.

Rather than beginning your shopping the day after Thanksgiving, as many of us do, "Try shopping all year long, and seek out bargains and sales," Viale says. "By avoiding the late shopping rush, you will be less likely to make large, impulsive purchases, and your purchases will be spread out on numerous bills instead of racking up all at once."

Shoppers can also cut back on their spending by leaving their cards at home, Dvorkin says. "Take cash instead, which will make overspending more obvious," he says. "Last-minute shoppers are unlikely to have saved up, which makes credit all the more tempting in a pinch." He also says that sticking to a list reduces expensive impulse shopping, which is typically what gets people in financial trouble.

Finally, Dvorkin suggests "sleeping on ideas for gifts." When you do hit the mall, make a list of where to get what and the costs. "Figure out if the costs for the various gifts are what you can afford, and if you know during the year that the item will be going on sale, wait until then to purchase the gift," he says. "For instance, in the spring, most retailers have white sales, so if you know Aunt Mary would love a quilt, plan to buy it when the white sales begin."

Credit Must-dos to Stay Ahead of the Game

To keep your head above water and out of credit trouble throughout the year, here are few tips Chris Viale, of Cambridge Credit Counseling Corp., says you might want to consider:

  • Set aside a percentage of your income. "A good rule of thumb for budgeting is to set aside at least 10 percent of your take-home pay into a savings account every month," Viale says. "The money you save can later be used during life events [that] can cause financial burdens, such as buying a new home, expecting a new baby, saving for your child's education or getting married. You may also want to use this money to pay for large expenses, such as a new car, a summer vacation or holiday gifts. By getting in the habit of saving, you make that first step toward stronger financial security."
  • Ignore the enticing minimum balance offers. "Paying off the minimum balance on numerous credit cards each month will never put a dent in the total amount you owe," Viale says. "The best way to pay off your bills is to set an amount yourself, higher than the minimum the credit card companies require, and stick to paying it every month."
  • If all else fails, seek help. If you are finding it hard to pay off your debts, consider seeking the help of a credit counselor who offers free initial consultation and can assess your financial situation.


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