Seven Ways to Avoid Holiday Debt

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How to stay debt-free this Holiday season. What you need to do, what you shouldn't try.

According to, Americans spend an average of $700 per household for Holiday gifts. If you are one of those people who end up spending more than they can afford, read these tips to make this Holiday season a debt-free one.

1. Set Spending Limits

Make a budget and then stick to it. If you can only afford to spend $100 in gifts this year, then find a way to make that money count. Develop a spending limit for each person on the list, says Steve Blankenship, a Certified Financial Planner professional and principal of Heritage Financial Planning. Stick to your limit! No matter how much your grandson would love the latest and greatest Xbox game, keep in mind that you will have to climb as high financially as the hole you dig for yourself.

2. Make a List

Know what and who you're buying for before you hit the stores. While it's not ideal to be preset on something, do have an idea in mind. Does your sister love writing? Plan on a diary or a fine pen. Has your best friend taken up painting? Get her a new set of brushes or an easel. A well-thought gift will be much more appreciated than an expensive trinket they can't use. Keep track of what gifts have been already purchased to avoid duplicates.

3. Get Crafty

While not everybody in your list will appreciate a batch of homemade cookies, some definitively will. You don't have to be especially talented to make homemade presents. Think a coffee-themed gift basket for a java lover or a gift certificate for babysitting for a friend that desperately needs some me-time. If you do have a talent, put it to good use, Can you hand-craft soap? Do you know how to make your own potpourri? Do you have a secret recipe for chocolate chip cookies that everybody loves? Think outside of the box.

4. Know when to Stop

According to Freedom Financial Network, LLC, it's important to know how to quit -- When you hit your budget limits, stop. If you need hard-core support to keep yourself in check, leave credit cards at home and put each person's budget in an envelope, in cash. When it's gone, it's gone, and you're done. Do your children really need 10 gifts each? Do you need six new glass ornaments? Establish your priorities well in advance.

5. Stick to Cash

If you really want to take control of your spending this year, forget credit cards altogether, says Blankenship. Studies have shown that consumers spend significantly more when they use credit cards than if they had used cash. It is easier to see your wallet's cash supply dwindling than it is to see credit card bills mounting.

6. Look For Free Gifts

If you truly have no money to spend, there are many things you can give that can't be bought at the local stores. Take somebody to a free church or university concert, offer to baby-sit for a busy mom or cook for an elderly family member, or make a memory book with an inexpensive photo album. Remember, thoughtful gifts are worth a fortune.

7. Push Your Focus Away From Spending

While gifts are wonderful to give and receive, we have allowed them to become the focus instead of simply another part of the celebration, says Heidi Wanken, founder of Shopping Holiday, a group that encourages people to take a holiday from shopping. Recover the spirit of the season by focusing on helping others (volunteer at a shelter, a hospital, or a soup kitchen), valuing the little things (the batch of cookies your elderly aunt took an hour to bake), or starting a holiday tradition with your family.

Far too many of us lose sight of our budgets when the holidays roll around and we spend too much without much consideration for the future. Instead, we can choose to plan for our future while also sharing with others.

Article Tags: Credit Cards

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