The reality of holiday debt usually doesn’t sink in until you get the bills or check accounts. Too much unpaid debt can cause your credit score to drop so we are sharing some tips to follow to avoid racking up holiday debt.
Pay in Cash When Possible
Statistics show 57% of Americans with credit card debt are willing to accrue more debt during the holidays. Gifts and décor commonly cause the most holiday debt, and since consumers rarely save for this, they charge for it.
Avoid this added debt by setting a little money aside each month to pay for gifts and holiday décor in cash. Leave your credit card at home to reduce the temptation to make spontaneous purchases, and use debit cards. Several studies have shown consumers spend less with cash, and it comes with less security risk.
Create a Budget and Make Lists
Decide how much you are going to spend, including travel, and ensure it doesn’t prevent you from making necessary payments. Make a list of things you need, a list for gifts, stick by it, and cross them off as you go.
Consider having some gifts be homemade, such as mixes in a jar, which you can often make for less than buying. If you are easily influenced by others, go shopping alone to avoid going over budget.
Use Credit Wisely
If you must use a credit card, try to stay within less than 20% of the limit, and don’t max them out. Set a budget the same as you would for cash, but check the remaining balance on the cards.
Use credit cards that give rewards for purchases and apply points you have already accumulated to gifts. Don’t be tempted to take out cash advances on your credit cards, because they often have high-interest rates.
Experts in Bankruptcy Law
With some careful planning, you can avoid falling into the holiday debt trap and you will enjoy the holidays better without the stress of debt.
We hope you have a great holiday season and if you need debt relief, consider OlsenDaines. We have offices all throughout Oregon and Washington with highly experienced bankruptcy attorneys ready to help! Just give us a call today to schedule a consultation.