Plan, give and spend smart to avoid holiday debt

The holiday season is supposed to be about joy, giving and spending time with our favorite people. But just as you might pack on a few extra pounds over the holidays, you might pack on some extra debt, too.

On average, Americans who plan to buy for friends and loved ones this holiday season aim to spend $660, according to a recent NerdWallet survey conducted by Harris Poll. But budgets are tight. Do you have that much to spend without running up your credit cards?

If you don’t have a holiday savings fund stashed away, smart planning and clever shopping can ensure you don’t end up struggling to pay off debt.

Make a plan and stick to it

When you hit parties without an eating plan, you may put on some pounds. Similarly, if you go to the mall without a spending plan, you can rack up debt. It’s not too late to formulate your strategy for this year.

Set a budget: In the 2016 holiday season, about a quarter of Americans surveyed didn’t have a gift budget, according to the online Harris Poll of 2,135 U.S. adults conducted in October 2017. Figure out how much you can spend, and think beyond presents. Factor in other expenses — gift wrap, holiday cards and meals, to name a few.

Limit your list: With your overall holiday budget in mind, decide whom to buy for. Your immediate family and close friends are probably non-negotiable. But do you really need to get presents for all of your co-workers, neighbors and the Amazon delivery person?

“Give yourself the gift of a stress-free start to the year by not waking up to a bunch of credit card bills,” says Steve Branton, a certified financial planner in San Francisco. “Once you know the amount you can actually spend without going into credit card debt and who you need to give a gift to, you can work back from there to determine who are the most important people, how much to spend on them.”

Give creatively

Clothes and gadgets are good go-to gifts, but they can be expensive.

“It behooves people to consider what all the options are around gifts, and there are a lot of creative things you can do to show someone you care without spending a lot of money,” says Paul Golden, spokesman for the National Endowment for Financial Education.

Give moments: Consider giving experiences, such as a “certificate” to an inexpensive or homemade meal together or a day at an amusement park. Memories may last longer than the latest gadget — and, as a bonus, this lets you spread out holiday expenses instead of stuffing them all into one month.

Get crafty: Homemade gifts can lend a more personal touch while saving you money. They don’t have to be complex, like a hand-knitted sweater. Search online for inexpensive DIY projects, such as photo collages or baked treats.

Hold a gathering in lieu of gifts: If you can give only to family this year, suggest that your friends gather for a potluck, cheap white-elephant exchange or other inexpensive activity.

“There is often relief across the board if you say, ‘Don’t buy me anything,’” Golden says.

Spend smarter

Get the best value when shopping:

Use credit card points: Check out your card issuers’ online malls for opportunities to use your points to buy gifts without spending money.

Compare prices before buying: Shop around and make sure you’re getting the best deal. If you’re in a store, open a shopping app to see what the price is online (but factor in shipping). Or call a competitor store to see what its price is. When shopping online, search for promo codes.

Watch prices post-purchase: You may still have a shot at a lower price even after buying, using a store’s price-match policy or your credit card price-protection feature.

Make sure bargains are bargains: Holiday sale ads tout big savings on select items, but investigate the typical price to make sure.

Leave the plastic at home: If you know you’re likely to overspend, stick to paying with cash. That puts a physical limit on your ability to spend and can help you honor your budget.