From News Nation:
“Head into shopping season ready to manage your spending and
debt”
Retailers once again have begun their bid for consumers’
attention with big sales early in fall, such as what amounts to a second Amazon
Prime Day sale. A longer holiday shopping season lets you spread out expenses,
but it also could lead to overspending. Danetha Doe, founder of financial
education company Money & Mimosas, said in an email, “It’s easy to go into
unplanned debt during this time because many of us show love to those we care
about by buying gifts or by spending money on travel to be with loved ones.” NerdWallet’s
2023 holiday shopping report bears that out: 52% of Americans incurred credit
card debt from holiday shopping last year, and 31% of them still have lingering
balances. Survey results also show that nearly 2 in 5 2023 holiday shoppers
(39%) feel pressure to spend more on buying gifts than they’re comfortable
spending this year, and 12% of 2023 holiday shoppers say they will likely use
some of their emergency savings to buy gifts. Whether you’re dealing with debt
or trying to avoid it, here are some strategies that can help.
1. Create a spending plan Take a good look at your finances before you do any
spending, and figure out how much you can afford to put toward gifts and other
costs. That can help you avoid a financial shock later. “Developing a
spending plan before you enter the holidays will help you avoid waking up on
New Year’s Day with a financial hangover,” Doe said. “Your plan could include a
list of all of the people you wish to buy a gift for and/or your estimated
travel costs if you are visiting loved ones.”
2. Set financial boundaries A financial boundary is a limit that
you set to protect your money. Boundaries can be especially helpful during the
holidays as you navigate the pressure to spend. “Your financial
boundaries may mean that you won’t participate in gift-giving because your money
has other priorities,” Doe said. “Perhaps you’re saving up for a home, paying
down debt or starting a business.” Aim to set boundaries before getting
into the thick of holiday shopping. For example, you might set a rule of
waiting at least a day before completing an online purchase. “The key to
sticking to your financial boundaries is mindfulness,” certified financial
therapist Celia Hughes said in an email. She suggested holding items in your
online shopping cart for at least 24 hours. “Come back and see if you still
want to make the purchase.” “Slowing down decision-making supports
holding down your boundaries,” Hughes said. “If you’re shopping in a store,
take pictures of what you want to buy and then go home and sleep on it.”
3. Spend time rather than money Money is a source of stress for many
people during the holidays. Prioritizing experiences and your relationships can
lift worry from you, and your family and friends, by shifting the focus away
from spending. “My advice to everyone, even if you are in a financially
healthy place, is to focus your holidays on experiences and relationships,”
Hughes said. “It may feel like a leap to move away from extreme consumerism,
but when your loved ones remember time together and time with you, it will be
easier for that to become the norm.”
4. Opt for low-cost gift-giving Choosing to focus on lower-cost gifts
is another way to capture the festive spirit without deepening debt or adding
financial stress. “For example, you could exchange handwritten letters
of appreciation to each other rather than buying each other gifts,” Doe said.
“If you’re feeling artsy, you could offer a DIY gift such as a candle, a
hand-drawn card, an air freshener made with fresh spices placed in a Mason jar,
ornaments, a candle holder or homemade jam.” And if you still want to
experience some holiday shopping, Hughes suggests: “Consider a gift exchange,
where each person secretly draws the name of another family member, and sets a
low spend amount, with the task of finding something that reminds you of your
favorite thing about that person.”
5. Use cash Using cash over cards may help you to be more mindful of your
spending — especially during sales. When you use a credit card, Doe
said, “It is so easy to swipe it and forget it, but if you have to pull out the
cash, you will be less likely to impulsively spend.”
6. Make a debt paydown plan As your spending plan and boundaries
help you keep holiday costs down, think about pushing those savings into debt
paydown to give yourself the gift of lower balances. If you need
inspiration to stick with it, try the debt snowball method. Focus that extra
money on your smallest debt first (still pay at least the minimums on your
other debts). Because you’re starting small, you’ll have a shorter time until
payoff. When that debt is paid off, turn to the next-biggest. Or if
you’re worried about interest costs, try the debt avalanche method. With this
strategy, you focus on the debt with the highest interest rate first. Also,
debt consolidation can help by combining multiple debts into one payment —
ideally with a lower interest rate. If you have good credit, you could look
into a 0% interest balance transfer credit card or a debt consolidation loan.
^ This has some good advice on how to save. ^
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