Plan, give and spend smart to avoid holiday debt

Give yourself the ultimate gift this festive season - a debt-free January - by sticking to a strict gift budget

Illustration by Alex Belman
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The holiday season is supposed to be about joy, giving and spending time with our favourite people. But just as you might pack on a few extra kilos over the holidays, you might pack on some extra debt, too.

On average, Americans plan to spend more than $550 on gifts for friends and loved ones this holiday season, according to a recent NerdWallet survey conducted by Harris Poll. But budgets are tight. Do you have that much to spend without running up your credit cards?

If you don't have a holiday savings fund stashed away, smart planning and clever shopping can ensure you don't end up struggling to pay off debt.

Make a plan and stick to it

When you hit parties without an eating plan, you may put on some weight. Similarly, if you go to the mall without a spending plan, you can rack up debt. With the holiday shopping season already in full swing, make your plan today.

• Really set a budget

In the 2016 holiday season, nearly a quarter of Americans surveyed did not have a gift budget, according to the online Harris Poll of 2,135 US adults conducted in October 2017. Figure out how much you can spend, and think beyond presents. Factor in other expenses - wrapping paper, holiday cards and meals, to name a few.

• Limit your list

With your overall holiday budget in mind, decide who to buy for. Your immediate family and close friends are probably nonnegotiable. But do you really need to get presents for all of your co-workers, neighbours, all of your children's teachers, the gardener, maid and the delivery person? Give to those who really need it.

"Give yourself the gift of a stress-free start to the year by not waking up to a bunch of credit card bills," says Steve Branton, a certified financial planner. "Once you know the amount you can actually spend without going into credit card debt and who you need to give a gift to, you can work back from there to determine who are the most important people, how much to spend on them."


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Give creatively

Clothes and gadgets are good go-to gifts, but they can be expensive.

"It behooves people to consider what all the options are around gifts, and there are a lot of creative things you can do to show someone you care without spending a lot of money," says Paul Golden, spokesman for the National Endowment for Financial Education.

• Give moments

Consider giving experiences, such as a "certificate" to an inexpensive or homemade meal together or day at an amusement park. Memories may last longer than the latest gadget - and, as a bonus, this lets you spread out holiday expenses instead of stuffing them all into one month.

• Get crafty

Homemade gifts can lend a more personal touch while saving you money. They don't have to be complex, like a hand-knitted sweater. Search online for inexpensive DIY projects, such as photo collages or baked treats.

• Hold a gathering in lieu of gifts

If you can give only to family this year, suggest that your friends gather for a potluck, cheap "secret gift" exchange or other inexpensive activity. "There is often relief across the board if you say, 'Don't buy me anything,'" Mr Golden says.

Spend smarter

Get the best value when shopping:

• Use credit card points

Check out your card issuers' retailer tie-ups for discount opportunities. Or if you have loyalty points, such as Air Miles card, retrieve points to buy gifts or to do a large grocery shop.

• Compare prices before buying

Shop around and make sure you're getting the best deal. If you're in a store, open a shopping app to see what the price is online (but factor in shipping). Or call a competitor store to see what its price is. When shopping online, search for promo codes.

• Make sure bargains are bargains

While event's such as's White Friday can yield big savings on select items, you should know the typical price to make sure you are genuinely getting a good deal. Similarly if the malls have sales on, make sure you know how much items were before the so-called sales price was applied.

• Leave the plastic at home if you know you're likely to overspend

Sticking to cash puts a physical limit on your ability to spend and can help you stay within your budget.