#RealMoneyTalk: This Time of Year is Breaking My Bank

The holidays can be hard for a number of reasons – especially when it comes to your finances. It’s pretty obvious why since so many cultures celebrate major gift-giving holidays, but really the whole season from Thanksgiving and Black Friday through New Year’s Eve can be stressful financially. According to a recent survey, consumers are expected to spend 5% more this year than they did last year. More specifically, a National Retail Federation report found that consumers plan to spend an average of $1,047.83 this holiday season with over half being spent on gifts for family, friends or co-workers. 

With the holiday season in full swing and sales popping up everywhere, you may feel pressured to spend as well, but it’s important to not go into debt and overspend because don’t forget: you’ll have to pay it all back (possibly, with interest)! And that could take a while. Those large credit card balances could hurt your credit score long term. We compiled some tips to alleviate the heavy spending that typically happens during this time so your wallet (and your DTI Ratio)  isn’t crying after the holidays!

In addition to these tips, having a #RealMoneyTalk with friends and family around holiday spending can ease the pressure and stress so they understand that you may not be able to buy expensive gifts or travel. 

Set Aside Money For Holiday Spending

When it comes to spending for a big Thanksgiving/ friendsgiving feast or gifts for loved ones, make sure to allocate money for holiday spending so you’re not going into debt. For instance, if you are planning to give a lot of gifts, write a list of how much you are willing to spend on each person and use apps like Mint to stick to your budget. If you want to be extra strict with your spending, you can withdraw cash for the exact amount you plan to spend so you’re not tempted to keep swiping your credit card and max out on your credit card limit while shopping. 

Take Advantage of Credit Card Rewards

Depending on what credit cards you have, look at what rewards are offered and make sure you’ve opted in to ones that make sense for you. These rewards could potentially be used for gift giving too. Some cards have partnerships with certain retail partners so you could buy a gift card from a specific retail store with that credit card, which allows you to purchase a $25 gift card for $20. There are also ways to just save money through cashback credit cards that reward you for spending on certain categories. For instance, Discover cardmembers can pay with cashback bonus at Amazon.com. Bank of America and others have cashback rewards cards so you can get 3% in a cashback category of your choice and 2% cashback at grocery stores. You can shop strategically by using specific credit cards with these types of rewards programs when spending. For example, credit cards with grocery shopping rewards can be super handy for Thanksgiving shopping.

Similarly, you can utilize travel miles or points to take a staycation or a trip with the family. If you don’t have these points already racked up, make it a goal for the holidays next year to use a specific travel rewards card to pay specific bills, etc. so you can cash in on those benefits later.  You can quickly rack up more points and rewards by using one specific travel rewards card for any shared rides (Uber, Lyft, etc.) you take and offer to put your card down for group outings and have everyone pay you back after (which can also be a good idea for credit cards that give cash back on restaurant/food purchases). 

Get Creative With Gifts

This holiday season, consider homemade or DIY gifts because after all, it’s the thought that counts right? Another idea is doing a secret Santa with a group of friends rather than buying each person a gift to save money. Or you could ditch the conventional material gifts idea altogether and instead gift an experience you can share with someone. Research shows that spending money on experiences brings more lasting joy than spending money on things. Investing in quality time with loved ones can often a more memorable and meaningful gift too. 

Look For Credit Cards With a 0% Interest Rate

If you are going to be spending quite a bit during the holidays, first try and save up for it as much as you can but you should also look into credit cards with a low-interest rate. For example, many credit cards offer an introductory 0% APR so you can specifically use that card for holiday expenses and pay down your debt with zero interest for a period of time. However, it is important to make sure you don’t miss any payments or you could lose the introductory rate! 

If you have good credit, getting a balance transfer credit card with a zero percent introductory APR can be a good way to actively pay off the debt with zero interest. Balance transfers do often have fees associated with them, so make sure to check those and see how long the promotional period is so you can play to pay off your debt before then. Debt consolidation of your credit card debt is another option to consider to reduce interest rates, especially if your credit score isn’t that strong yet. 

Even though the end of the year into New Years is filled with festive activities, parties, and gifts, you can still enjoy the holidays without overspending and going into debt. It’s okay to buy the Christmas decorations and save on New Year’s Eve plans or spend on what matters most to you — just balance out the spending so your finances aren’t taking a huge hit with every holiday. You definitely don’t want to start the new year with debt. Try out some of these tips to avoid going into debt this holiday season and ensure your finances are in a good place as you head into 2020.