Last year, U.S. shoppers built up an average debt of $1,054 during the Christmas season. This was an increase of 5% over the year before, according to a survey from MagnifyMoney, a personal finance website. The survey also found that while 44% of shoppers racked up more than $1,000 in holiday debt, 5% accumulated more than $5,000 in debt.
That is a lot of debt, especially when it is gained in such a short period of time. Bouncing back from that won’t come quickly, and for anyone who is already on the brink of filing for bankruptcy, it could be what sends you over the edge.
How Does This Happen?
It seems that many Americans just cannot stick to their budget, if they even start out the shopping season with one. According to mobile banking startup Varo Money, Inc., 74% said they underestimated costs. Areas people go over budget on include:
- Last minute gifts (36%)
- Regular holiday gifts (27%)
- Food (27%)
- Decorations (17%)
- New holiday outfits (16%)
What You Can Do Better
When we look at that list, there are several items that could be eliminated altogether (decorations and new holiday outfits, in particular), and the other areas could definitely be reigned in with some planning and thought. Here are some tips:
- Start and end with your budget. Especially if money is tight, start planning your holidays as early as possible. Realistically, think about how much you can spend, and make necessary adjustments, such as cutting back on eating out and saving that money in a gift fund. Look for other areas where you may be able to free up some cash for a short period of time. The key though is actually sticking to this budget, no matter how small it may be this year.
- Write it down. Write down your budget, and refer to it often. Also write down your shopping list, list of events to attend or host, etc. When it comes to thinking about gifts for each individual on your list, cut your expectations in half, at least. If you’ve typically given each child five gifts, cut it down to two this year. If you’ve typically spent $50 on each family member, set your budget at $25.
- Only use cash or debit. If you follow this simple rule, you will completely avoid going further into debt over the holidays. If you don’t have the money right now, you shouldn’t be buying any gifts. Period.
- Factor in all the other stuff. Gifts will be a large part of your holiday budget, but there are other items as well that should be factored in, such as food for special occasions and treats throughout the season, new lights for the Christmas tree, wrapping paper, and more.
- It is true that it’s the thought that counts. Maybe this year is the time to get a little more creative by regifting or giving homemade gifts. If you have unused gift cards or gifts that have never been opened, those can make great options. There are also many, many ideas that can easily be found online for simple, inexpensive, but special gifts that you can make.
- Limit time and gift type. Think about setting limits on when you will shop and what you will buy. Maybe one weekend after you get paid, you spend the day at a couple of stores purchasing all of the gifts you need. And that’s it. Or maybe you decide to give everyone a $25 gift card, across the board. Instead of hosting multiple holiday gatherings or parties, just host one. Instead of making it a dinner party requiring a full meal for many guests, invite only your closest friends earlier in the afternoon where only a few light snacks will be required. Making things more simple will naturally lower your spending.
We hope these tips will be helpful as we go through December. This is a wonderful time of year that should be enjoyed, not a time to be stressed about adding to your debt load.
If you are struggling with excessive debt and looking for a sound solution, the attorneys at Tom Bible Law, can help you explore your legal options. We have helped numerous clients from Chattanooga and throughout Tennessee and North Georgia achieve their debt relief goals by guiding them through the bankruptcy process. We work with every client personally, giving each and every bankruptcy case the time and attention it needs. We understand the financial pressures our clients are facing and work to resolve their debt problems in a favorable, cost-effective manner. Our bankruptcy lawyers have more than 80 years combined experience and are here to help. Call us today at 423.424.3116 or drop us a note here.