The holiday season is here and Christmas is rapidly approaching. For many people, the holidays mean a great deal of gift buying and giving, travel to and from family, and social occasions with co-workers and friends. All of those activities cost money and many people find themselves in serious debt every January. How can you avoid the debt-laden aftershock of the holidays? There are several ways to plan and prepare or adjust how you go about holiday spending.
You can change your savings habits so that you have the money this time – ahead of time. If you’ve been hanging onto all the receipts and credit card bills from last year, you have the perfect opportunity to see exactly how much you spent last year. Pull out all the records you have from that time last year and add up the costs in columns: gifts, travel, social obligations, and any others.
Now, total the costs for all the lists.
How much is the total? Take that number and divide it by 12 and see how much you need to set aside each month to have that amount for the next holiday.
Can you comfortably afford that amount in your budget? If so, great – set up a savings plan for it now. If not, let’s talk about some other options.
Using your lists from the first step, will you need the same number of gifts, or can you work out a gift exchange so that you can buy fewer (perhaps nicer) gifts this year? Will you have the same social obligations or can you perhaps skip some of them and send a card or make a phone call to connect instead? Will you have the same travel obligations or can you host the family get-together and let everyone come to you instead this year?
No one says you have to buy all the gifts at once. If you have 10 gifts to buy, set a goal to buy one each month. Spreading out your gift-buying throughout the year means you can pay cash for that hat or scarf or bottle of wine and set it aside until it’s time to wrap it. Also, why not buy the paper and cards and ribbon and other accoutrements in the after-Christmas sales for next year? You’ll spend a lot less and you’ll be prepared for wrapping all year long.
Spending time with family is often the most important part of the holiday season, but for some families it can be the most costly of holiday expenses because many of us live spread out across the country. No one says it has to be done the same way every year and often a little creative thinking and planning can produce some really great results.
Beyond the obvious of using travel search engines to hunt down the best prices for airline tickets, and taking advantage of alternate (read less costly) locations, can you decide to get together after the holidays or in the summer this year instead? Is it possible to host a couple of joint get-togethers and use the Internet and free voice over IP programs like Skype to connect and chat?
Start thinking now about how you will get through the holiday season this year without going broke, and you’ll be far ahead of the game come January and you’ll be much happier.
I write about things that have (and haven't) worked to improve my family's financial situation. What works for me may or may not work for you, and you should always consult a financial advisor before making important financial decisions.
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