Editorial Policy

Creative tips to keep holiday spending under budget

Allie Johnson

October 28, 2015

The holiday countdown has barely begun, so shopping might not be top of mind. But if you start before your Thanksgiving table is set, you can avoid holiday debt and reduce shopping stress.

“When you procrastinate, you feel rushed, and it limits your options,” says consumer expert Andrea Woroch, who blogs about saving money at AndreaWoroch.com.

You could end up making frantic (and expensive) last-minute gift purchases, pay dearly for fast shipping and wake up on New Year's Day snowed in under a pile of debt.

But your holidays don't have to unfold that way. Here are three steps to take for a happy, debt-free holiday season.

1. Budget for merrymaking

Planning ahead is the most important thing you can do to avoid holiday debt, says Ellie Kay, who bills herself as “America's Family Financial Expert.” Here's an easy way to budget: 

  • Make a seasonal spending plan. First, look at your regular monthly budget, Woroch says. Unless you've saved for the holidays, you'll have to look to your discretionary spending funds (everything but your mortgage or rent, bills, debt repayment and savings) in November and December to pay for gifts, food and travel. Don't forget to take into account the tendency to buy little extras for yourself and others. The average American plans to spend about $805 this holiday season, with about $130 of that going toward non-gift splurges, according to a 2015 survey by the National Retail Federation. It's important to figure out the total amount you can spend without going into debt, Kay says. “Get your number first and work backward from there,” she says.

The No. 1 reason people go into debt over the holidays is they equate spending money with love.”
— Ellie Kay,
who bills herself as “America's Family Financial Expert”

  • Make your list and check it twice. Make a list of everyone you want to buy a gift for and do some quick math to see if it's financially feasible. If your list is too long, either cross off some names or get creative. “You might bake cookies for your neighbor instead of buying a nice bottle of wine,” Woroch says. “Or make Christmas ornaments for your cousins instead of buying sweaters.” In fact, Kay recommends making three lists: people who will get cards only, pals you'll bake or make a craft for and close friends and family who get gifts. Then set an amount you'll spend on cards, crafts and each gift, Kay says. Try using the free online tool MyChristmasBudget.com from Dave Ramsey, she says.

2. Gather extra Christmas cash

If your budget is a little short, or you just want a cushion, it's easy to come up with some extra money. “I'd suggest giving your holiday budget a boost,” Woroch says. For example:

  • Sell unwanted stuff. Selling unwanted items is a great way to help pay for the holidays, Woroch says. Last holiday season, for example, she made $200 by selling some clothes and an unopened bottle of perfume. “Even if you make $50, that helps,” Woroch says. So, hunt around your house for books, clothes you never wear, old smartphones and other gadgets, dusty exercise equipment and the not-so-great gifts you got last year. You could even swap some old items for gift cards, such as with Target's electronics trade-in program, she says. And there's a bonus: You clear out clutter to make room for your new gifts.
  • Dig up unused gift cards. An average U.S. household might have as much as $300 worth of unused gift cards sitting around, says Shelley Hunter, known as the “Gift Card Girlfriend” at GiftCards.com. “That's a lot of money,” she says. So go on a gift card scavenger hunt through your wallet, junk drawer and sofa cushions. Check the balance on each card by calling the number on the back or checking online, she says. Then you can use the gift card to buy a present, re-gift the gift card to someone on your list (making sure you confirmed the balance and you haven't registered the card to your own account) or sell the gift card online for up to 92 percent of its value, Hunter says.
  • Use your credit card rewards. It's not just gift cards that go unused. Billions of dollars in credit card rewards languish, too, Woroch says. “The holidays are a great time to redeem those rewards,” she says. Even if you've racked up airline miles, you can get holiday spending mileage out of them at the airlines' online rewards malls. And don't forget about any points you might have accrued in retailer loyalty programs. For example, some retailers, such as Sephora, offer little gifts to loyalty program members for certain levels of spending. “Those make great stocking stuffers,” she says.

You might bake cookies for your neighbor instead of buying a nice bottle of wine. Or make Christmas ornaments for your cousins instead of buying sweaters.”
— Andrea Woroch,
who blogs about saving money

3. Trim costs of holiday gift giving

It's also a good idea to stretch your money as far as possible by shopping smart, Woroch says. For example:

  • Put quality over quantity. It's easy for kids to see ads on TV, glimpse stuff on store shelves and decide they want everything, says Kay, a mom of seven grown children. A holiday gift limit — in her family, it was three simple gifts per child — can help children narrow their lists to what they really want, and even teach them about budgeting, she says.
  • Start a new tradition. If you have a huge extended family or an office full of co-workers, buying a gift for everyone can strain the budget. If you've been hoping to start a less expensive tradition of, say, drawing names or doing a white elephant gift exchange, bring it up now, before Aunt Mabel has bought matching sweaters for the whole family or Stan in the next cubicle has ordered personalized pens. It's a good idea to talk to a few others to build support for your idea before pitching it to the group, Kay says.
  • Shop smart online. This holiday season, consumers plan to do almost half (46 percent) of their shopping online, according to the NRF survey. So, strategize to save big, Woroch says. First, comparison shop to make sure you get the best price, she says. To do so, you can use a price comparison site such as PriceGrabber.com or a browser add-on such as PriceBlink. Before you hit the buy button, look for coupon codes. To find discounts, Kay recommends the RetailMeNot app, which can be used online or in stores. And you can use TrackIf.com to track prices on items you already bought, Woroch says. If the price dips, you can call the retailer to ask for a refund of the difference, Woroch says. Or, you can file a claim with your credit card company if you bought the item with a card that offers price protection, which refunds you the difference if a price drops within a certain time frame, usually 60 or 90 days. When you're shopping online, also look for free shipping and free returns, Woroch says.

Finally, remember there are many (cheap or free) ways to show others you care this season, Kay says. “The No. 1 reason people go into debt over the holidays is they equate spending money with love,” she says.

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