How to avoid credit card debt this Christmas

The holidays are supposed to be a fun time for everyone, a time for family and friends to be together and spend time with one another.

Unfortunately, the holidays are also a time of rampant commercialism where marketing and advertising efforts are ramped up to try and get you to spend even more money. The pressure to spend more than you can afford is higher during the holiday season and leads many people to use their credit cards to finance gifts for others.

However, using credit cards for holiday shopping can result in big credit card bills that take a while to pay off and which quickly tarnish the fond memories you just created. Here are some tips to avoid credit card debt this holiday season.

Start saving now

The first step to avoiding credit card debt this holiday season is to start saving for purchases now. Whether you open up a savings account at your bank or grab an envelope or shoebox that can serve as your own personal savings account, start setting aside money each week or each paycheck. It may not sound like a lot, but saving £20, £50, or £100 a week can turn into big bucks quickly.

Stick to your budget

After you open your savings account or grab that envelope or shoebox, you’ll need to make a budget for gifts. Count the number of weeks you have to shop and multiply that by how much you can save every week. The resulting number will equal to your gift budget. For example, if there are six weeks of shopping left and you can save £40 a week for gifts, your total gift budget will be £240. Once you have your budget, stick to it.

Make a list

Now that you have a budget, the best way to stick to it is to come up with a gift list for friends and family. Make a list of gift recipients and divide your gift budget by the number of people on your list. The resulting number is how much money you can spend on each recipient without going over your budget. For example, if there are 10 people on your list and your gift budget is £240, your budget per person is £24. Think that’s a low number? Remember, your role this holiday season is not to go into debt in order to finance gifts for your friends and family. If you can afford more, great, if not, so be it. If someone’s upset you didn’t spend more on them, the problem is theirs, not yours, and you might want to reconsider them for next year’s list.

Pay with cash

The most direct way to avoid going into credit card debt this holiday season is to simply avoid using your credit cards by paying cash for your purchases. Although perhaps easier said than done for some people, if you start saving money now, make a budget, and make a gift list, using only cash to buy gifts will become an easy goal to accomplish. The holidays are great, but again, the pressure to spend more than you can afford often comes from retail stores and — you guessed it — credit card companies. Your friends and family don’t really care. Live within your means, shop within your means, and don’t finance gifts with credit cards.

Shop online

Want to get the most out of your money? Try shopping online first. Websites like Amazon and others often have lower prices for items on your gift list and, if you order far enough beforehand, you’ll have the time to take advantage of free shipping on your order, which will usually take from seven to 10 business days. Of course, it’s hard to use cash online, but you can use your debit card instead. For better security, make sure not to save the debit card information into a user account. That way, it’s more difficult for online thieves to get a hold of your information.

Leave your credit cards at home

It might seem obvious, but leaving your credit cards at home while you shop for holiday gifts is especially important when it comes to avoiding credit card debt. There’s simply too much temptation to pull them out and use them on gifts not on your list that go beyond your budget or on gifts for yourself. People who carry credit card debt typically live beyond their means and buy stuff they can’t afford by carrying their credit cards with them wherever they go. If you have a problem sticking to your gift budget, or think you might be tempted to use your credit cards, simply leave them at home. You can’t use them if you don’t have them with you.

The holidays are supposed to be a fun time for family and friends to spend some time together and create lasting memories. But too often the holidays result in lasting credit card debt that takes months or even years to pay off. Do the smart thing and use these tips to avoid credit card debt this holiday season.

Here are 44 additional tips to help you save money this Christmas from the amazing team at MSE!

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