These 4 Tips Can Help You Stay Debt Free This Holiday Season

Black Friday sales top $9 billion for the first time

Consumers spent a record $9.12 billion on online purchases on Black Friday and another record $11.3 billion on Cyber ​​Monday, according to the latest data from Adobe. So far in November, consumers have spent $107.7 billion online overall, nearly 10% more than last year.

Yet roughly 60% of Americans were living paycheck to paycheck before the start of the month.

“Buyers continue to spend despite inflation and economic headwinds,” said Tom McGee, president and chief executive officer of ICSC, the retail real estate industry’s largest trade association.

As high prices continue to affect the financial situation of most households, more buyers are relying heavily on credit cards and flexible payment plans to make their purchases.

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But with APRs approaching 20%, or even 30% on some retail cards, credit card debt can take years to pay off.

While buy now, pay later often promises zero interest, studies have also shown that buying in installments could encourage consumers to spend more than they can afford.

Last year, more than half of shoppers made a purchase with buy now, pay later they couldn’t pay, according to a survey by Oxygen, an online-only bank.

This year, Americans are on track to get even deeper in debt. However, experts say it’s not too late to avoid the same financial pitfalls this season. That is how.

How to avoid accumulating Christmas debt

Black Friday shoppers wait to enter the Nike store at the Opry Mills Mall in Nashville, Tennessee on November 25, 2022.

Seth Herald | AFP | fake images

1. Cut your credit card

If your credit card balance already seems unmanageable, “it’s time to cut it down and focus on paying it off,” said Lori Gross, a financial adviser at Outlook Financial Center in Troy, Ohio.

“Use cash from now on if you still have to shop during the holiday season.”

2. Think of a strategy

Add up what you’ve bought so far and set a budget for the rest of the season, Gross said. “It should be substantially lower if you’ve already spent too much.”

Share your strategy with a family member or friend so they can help you keep up with your new budget and keep you from getting further into debt, he suggested. There are also free online resources and apps that can help you organize your finances for the holiday season.

3. Create a vacation fund

It’s not too late to start a vacation fund. “Strategize now and hold yourself accountable,” said Michael Sheppard, group vice president at Minneapolis-based financial services firm Thrivent.

Challenge yourself to save money each week, he advised. “Making routine transfers from spending accounts to a designated holiday savings account for future purchases can really add up.”

4. Communicate with your family and friends

If you want to cut back on your celebrations, start those conversations with loved ones now, Sheppard advised. “Instead of exchanging gifts, maybe there’s a holiday event, concert or play that your family can attend together,” she said. “Make shared experience an inexpensive memory.”

Also consider a charitable donation in lieu of gifts. Making time to volunteer can be especially meaningful, Sheppard said.

“This can help keep you focused on what matters and provide clarity on what you want to accomplish during the holiday season.”

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