You’ve seen the footage on the news. You’ve been in the middle of it. You’ve stood in the vexing lines. You’ve circled for the elusive parking spots. Holiday shopping can be downright frenzied, not to mention impulsive.
With the holidays approaching, it is easy to let you spending habits get out of hand. You don’t necessarily need to go to the mall to feel the pressures either; merely browsing the internet or checking your email can put you in the same frame of mind.
With all the opportunities to spend, how do you keep your spending under control? Whether it be in a brick and mortar store or in your pajamas on the couch, we’ve got some holiday spending tips for you!
Make a Holiday Spending Plan
Most people do their holiday shopping without one. Set a dollar limit that you can spend per week, and do your best to spend less than your set limit. As you plan your financial life – and check on your plan every few days – you may feel less stressed and more in control this holiday season. In fact, you may want to make two budgets, one for shopping, and the other for the entertaining that comes hand in hand with the holidays.
Recognize the Hidden Costs.
Holiday shopping isn’t just a matter of price tags. When you don’t visit brick and mortar stores, you don’t eat the food at the food court or coffee shop, you don’t spend money on gas.
On the other hand, when you shop online there’s always shipping to consider in addition to the fine print return policies that aren’t always so forgiving. Online shopping also comes with risks as well as hidden costs.
Counteract Holiday Expenses Elsewhere in Your Budget.
Maybe you spent a couple hundred more than you anticipated on that flat-screen. To offset that extra spending, pinpoint some areas where you can save elsewhere in your budget.
This is a good opportunity to evaluate what you’re spending that you don’t need to be. Could you find cheaper auto insurance? Could you eat in more this month? Could you drive less or cancel that premium cable subscription?
Tackling the Debt if You Do Go Overboard.
The holidays are over, and it turns out you accidently went overboard. Now you need to strategize just how to attack the excess debt. You may want to pay off the smallest debt first, then the next smallest and so forth onto the largest. That’s’ the debt snowball approach advocated by Dave Ramsey.
A different strategy, favored by Suze Orman, the debt stacking strategy, where you pay down the debt with the highest interest rate first, then with the one with the second highest interest rate, and so on.
With the latter method, you can potentially realize greater savings on interest charges, but you lose the accomplishment of quickly erasing a debt. In the debt snowball strategy, you make minimum payments on all your debts (just as in the debt stacking strategy approach), but you devote all your extra cash to the debt with the smallest balance. The upside there is the psychological high of quickly paying off a debt; the downside is the lingering, large interest rate charges that come with the largest debts.
If you aren’t vigilant, the holiday season could leave you with a “debt hangover,” or contribute to a severe debt load you may be burdened with.
Indulge Sensibly.
If you feel like indulging yourself, do so sensibly. Some people do give themselves holiday gifts, and the same logic applies. Whether it’s a meal, a motorcycle, or a spa package, don’t break the bank with it.
Plan Ahead for Next Year.
Lastly, think about setting aside some “holiday money” for 2017. If your finance allow, how about putting a couple hundred away for next season? Invest in interest-bearing accounts, or elsewhere, that sum could grow even larger.
