The holidays may come with immense joy to all of us, but it is also true that a financial hangover is also the biggest problem during this holiday season and the New Year. People become obsessed with overspending during this season and start the new year with a huge load of debt. You not only have to pay off your credit cards but within two months you also have to take care of tax debts. 

However, there are options that you may try to save money during the holidays and pay off existing and new debt. 

Here are ways to save money during the holidays and pay off debt.

1. Create a holiday budget

If you want to keep your spending under control in this holiday season, the first thing you need to do is to create a budget and stick to it firmly until the holiday season is over.

A lot of wise consumers might have saved early for the holiday shopping by opening conventional Christmas Club accounts at their bank or credit union. They might also choose short-term certificates of deposit to grow their wealth but during the current pandemic, that might be challenging.

If you weren’t able to save earlier, then you have to decide how much you can spend on gifts, holiday decorations, food items, travel expenses, and other related costs. You should make extra provisions for unplanned purchases that you may need. Make sure you create a decent fund that you may use properly so you don’t end up getting into more debt.

2. Make a list of what you want to buy and stick to it

After you’ve created the holiday budget, make a list of all things you want to buy this holiday season. Then again, make a list of the people for whom you want to buy gifts.

If the list becomes too long, make a second list by picking up only the essential items that you really need. This way you can shorten the list and also stick to your budget.

Consider leaving out the names of acquaintances from your gift list. Focus on giving gifts only to those who are very close to you. More importantly, leave some space for getting a gift for yourself too.

3. Keep your eyes peeled for special sale days

Take advantage of sales during this holiday season. Check out some great sale days when you can grab good items at cheap prices. Below are some examples:

  • Amazon Prime Day
  • Black Friday, the day after Thanksgiving
  • Cyber Monday for buying tech and gadgets
  • Free Shipping Day, hundreds of stores offer special deals with free shipping on Dec. 14

The prices of electronics, small appliances, and many other electronic items are reduced during Black Friday sales, so that is the best day to to take advantage of huge bargains for yourself and others. Considering the current economic situation, you should wait a bit and choose items that you know you really require. 

4. Use the avalanche method and start paying off debts

You shouldn’t wait for debts to get piled up so start before your bills are generated. Two primary methods can be used for debt repayment – the avalanche method and the snowball method.

The avalanche method targets only debts with high-interest rates. Once you follow this method, you have to choose the highest interest debt first and make additional payments towards it. This way you can save from interest payments on high-interest debts such as credit cards.

5. Pay only in cash while shopping

The best way to avoid holiday debt is to use cash while buying everything. Once your holiday budget is prepared, withdraw the same amount from your bank and stick to your spending plan.

Once you have used all that money, you have to stop shopping. Paying with cash is always wise if you are running low on funds.

You obviously can’t get good deals offered online if you use cash for shopping. In that case, you may use a prepaid card. Prepaid cards are offered by many retail stores including Walmart.

With a prepaid card, you have a limited amount to spend but this card can be easily used online and it’s a great way to track your expenses.

6. Review your credit cards

Make sure you’ve determined why you are using credit cards and how. Do not try to use credit cards with annual fees and use more reward cards as much possible. Accumulate these rewards and use them towards your holiday shopping.

Credit cards are very useful during the shopping season but they can be dangerous and cause you to incur serious debts if not used responsibly. Always use the card with the lowest interest rate and track your credit card spending closely.

7. Use apps to save money

Use various apps available in the app store and make your holiday shopping season successful. You’ll find many budgeting and money-saving apps like Mint that can help you to track your spending.

If you have memberships in popular stores, you may buy items in bulk and save money. During the holidays you may need a few household items more like toilet paper, soap, shampoo, detergent, etc. Buy these in bulk and get a discount. 

For great discounts, search on Google and check prices on Amazon, Walmart, and eBay.

8. Use tax returns and bonuses to pay down debt

Holiday bonuses and tax returns are two main sources of money that can be helpful to pay off debts such as credit card debt. Make sure you utilize all of the extra income by investing it to pay off credit card bills or save them for next year’s holiday shopping expenses. Also, if you have tax debt problems, save as much as possible and pay tax debt as soon as possible. 

9. Go potluck or play Secret Santa

Instead of providing a large holiday meal and bearing high expenses, you may ask your guests to bring a dish from their home to share. This way you can save money during the holidays, and also everyone can try different types of food.

If you’re part of a large family, play Secret Santa for gifts this year. This way, every family member has to buy only one gift for another person. You can find several different Secret Santa gifts online, or you may craft your own gift.

10. Avoid last-minute shopping

There are two disadvantages of last-minute shopping. First, when you are in a hurry, you can’t sort out what you want to buy and what you need resulting in overspending.

Secondly, last-minute shopping can make you lose great deals and great products at a cheap price. A wise shopper always plans the shopping earlier and shops as soon as possible before stocks run out. 

Hopefully, these 10 tips will help you from going over your budget and incurring even more debt during the holidays. If you absolutely have to borrow extra funds, save it for urgent matters like medical emergencies, urgent home repairs, and other unavoidable expenses.

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