Strategies to Avoid Post Holiday Debt

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Tis the season to gather with family and friends, attend festive parties, exchange thoughtful gifts and donate to worthy causes. While a credit card with an open balance might feel like an invitation to a holiday super-splurge, the last thing you want to do is give yourself the gift of debt in 2022.

An unpaid credit card balance of $1,000 with an interest rate of 18% can take over five years to pay off, when you make only minimum payments (of about 2.5%). Why burden yourself when you can develop a spending strategy that avoids wallet-busting expenses altogether? Here are tips to keep your holiday spending off the naughty list.

A Budget Is Your Best Friend

It may sound simple, but it’s important to start with a basic, comprehensive holiday budget. Begin by knowing your limits. Prioritize your expenses and include all costs, such as:

  • Gifts for family, friends, coworkers and the people who make your life better 
  • Extra groceries, beverages and gifts for parties and holiday gatherings
  •   Holiday outfits, haircuts and accessories.
  • Special concerts, events and activities with the kids
  • Cards, postage and gift shipping
  • Dining out and holiday entertaining.
  • Holiday decorations, wrapping paper, ribbons, gift bags and bows.
  • Donations to your favorite charitable organizations.

Manage Money Wisely. Shop with a fixed amount of cash so you can’t overindulge. While it’s convenient to make purchases with your credit card — and cashback bonuses can be enticing — it’s no bonus if you end up paying interest charges and late fees. And always, ALWAYS shop with a list. It can be tempting to overspend and purchase unplanned “doorbuster” items during big holiday sales and promotions.

Team Up with Family and Friends. Instead of buying gifts for everyone in your family or work group, set up a gift exchange and draw names to help curb expenses. Agree on a price limit for gifts among family, friends and other groups.

Get Creative, but Be Careful. Sometimes a homemade present, such as nicely packaged baked goods or a knitted scarf and hat in a festive gift bag, can mean so much more than a store-bought gift. But be wary of costly ingredients and expensive supplies. Sometimes food and craft items can exceed budget limits, too.

Happy Holidays and Beyond

Make this holiday season a December to remember — and not because of the big credit card bill you get in the mail in January — by avoiding budget overruns and unwanted interest payments. There’s no need to take the joy out of celebrations: Plan ahead instead. For more information and tips for budgeting and financial planning, contact your WellCents financial professional.






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