5 Ways To Prepare For Holiday Spending
I know I know...It is June why in the heck am I talking about the holidays?? The reason is the average family goes into $1,000 of debt that they are unable to pay off come January. This means your $1,000 of holiday presents can end up costing thousands of dollars by the time they are paid off. For example, if you would only pay the minimum balance, it could take you 6 years and over $500 of interest to pay off the holidays this year. This is because credit cards carry MASSIVE interest rates (15% - 25%) depending on the type of card you have. So what can you do to avoid the yearly trap that sets your 2020 up for pain before it even gets started? Here are 5 Holiday Spending Tips to help you keep control of the holidays.
If you have to travel, book your flights now!
If you have not already booked your flights for the holidays, book them now! Typically you will find the best deals at least 6 weeks from your date of travel. The best place to search for flight is to use Google Flights. You can search for your ideal dates, as well as see the cheapest days to fly surrounding your specific days. If you are able to fly on December 25th, you can almost guarantee you will find a great deal! Google Flights also allows you to setup an email alert to constantly check for you and let you know if your flight changes price. Be aware that Southwest Airlines does not publish their fares for Google Flights, so you will need to search their site directly to find their deals.
Analyze Prior Year Holiday Spending
Alright, this is the big one. We want to be able to buy every gift in the world for our friends and family during the holidays, but sometimes it just isn't practical. You should NOT be going into unrecoverable credit card debt just to keep up with the Jones's and exchange gifts with 100 people. A great start is to sit down and make a list of everyone that you bought gifts for last year and scrutinize the list for any ability to reduce the number of names, or reduce the value of the gifts being purchased. This can be very difficult to not only do, but to communicate to the people. A great way to have this conversation is not to give them an excuse, but a reason why you would like to skip gifts this year (or set a low cap). You can tell them that you are trying to pay off your student loans, saving for your down payment, etc. If they are upset that you are getting your financial house in order instead of buying them a gift, it is probably best to move on from that relationship.
Make A Budget For Holiday Spending
This builds on the ability to analyze your spending. If you didn't keep a detailed list of your expenses for the holiday's last year, please please please keep a list this year. It is the perfect time to start and will give you a healthy understanding of how your holiday spending impacts the rest of your financial year. When thinking of your budget, make sure you are considering all of the costs associated with the holidays, not just gifts!
- Holiday gifts for friends and family
- Yearly tips for post office, Trash/Recycle, UPS, FedEx, baby sitters, etc
- All travel costs including your flights and car related expenses
- Required gift exchanges at work or for your children's school
Resist The Gift Yourself Temptation
This time of year is notorious for Black Friday and Cyber Monday. With all the hype people end up buying expensive items because it is the deal of the year! Remember, if you didn't absolutly need a 65" flat screen TV, you didn't save $200 you SPENT $300. If you are serious about taking control of your finances, and want to get your holiday spending under control, resist this intense temptation this year!
Plan Ahead!
It may be too late this year to start saving to fund your holiday spending, but it is a perfect time to start thinking about the holidays in 2020. Use the strategies you have learned here today to understand your holiday expenses and start saving in January to ensure you can afford the holidays in 2020. This means, if you calculate all your costs and you spend a total of $1,000 on the holidays, you should be saving $90 a month into an online savings account in 2020 to ensure you meet your $1,000 need in December. This will help you make the hard decisions next year when deciding how much money to spend on the holidays if you know you only have the money in that special savings to spend on the holidays.
