The holidays are one of our favorite times of the year. We get to spend time with family, and take a break from our work to catch a breath before the new year kicks off. Unfortunately, this is also a time of year when many people will make poor financial decisions that lead to a holiday hangover that could last for years.
According to a recent survey by credit karma, over a quarter of Americans plan on going into debt during the holidays. In other words, they intentionally plan to dig themselves into a deeper hole than they're already in with debt. Some of the other key findings are listed in the table below.
What strikes us as most saddening is that 43% think that debt is unavoidable during the holidays and 22% are still paying off last year's debt. Talk about a long hangover!
If you've been reading this blog for more than a minute you know just how ridiculous these statistics are. Going into debt to buy xmas gifts is unavoidable? Seriously?!?!
5 Hangover Avoidance Actions.
Don't be one of these survey participants by making some big mistakes this holiday season, especially if you've made some progress this year on getting out of debt. Here's five simple tips to keep from getting a holiday debt hangover.
1. Determine what you are going to spend BEFORE you spend.
One of the keys to managing your holiday spending is to start with a plan. How much can you afford to spend? Who do you need to buy for? Make a list and check it twice to keep your spending in check.
2. Set up a gift exchange with family.
One of the things we've done to limit holiday spending is to setup a gift exchange with family. This can be extremely impactful if you have a large family. This may be a tough subject to bring up with your family, but believe us and the 52% of credit karma's survey participants who said if they could they'd skip holiday giving, most of your family will appreciate it!
3. Buy online to avoid overspending.
Shopping in a store or at the mall makes it too easy to overspend. You fill your cart with stuff and impulse buy and don't know how much you spent until they ring up your total at the checkout (and have you ever put anything back when the total was more than you wished it would be...we didn't think so:-).
Buying online makes it much easier to avoid impulse buying and see a real-time tally of your spending as you fill your cart. It's a lot easier for most of us to unload things from a virtual shopping cart than a real one.
4. Always pay with cash or a debit card.
This one almost goes without saying, but we need to say it. If you can't buy without paying cash or using your debit card you can't afford it. Put it back. Find something less expensive. You'll be glad you did once the holidays are over.
And if you're thinking about using your credit card to rack up some extra miles rethink it so you don't become like over 50% of people who carry a credit card balance. Credit card companies don't give things away because they are in the holiday spirit, they do so because it help increase their profits.
What's in your wallet? Hopefully, your money not borrowed credit card money!
5. Do something or make something for others as a gift.
Do you remember what you received for Christmas last year? How about your kids? Do they remember? Probably not. Gifts tend to be short lived, but when you actually do something for others those memories stick and have far greater meaning. Think about it. Would you be more likely to remember and cherish another tie from your kids or something they made for you?
The holidays should be a time of celebration and going further into debt doesn't sound like reason to celebrate does it? Of course not.
Think before you act with your precious dollars this holiday season and you will have something to celebrate as you take one step closer to becoming a debt-free millionaire doctor! Live intentionally this holiday season.