How to stay away from holiday debt

Happy December! For many people, the holiday season is one of the best times of the year. Between decorating your home, exchanging gifts, and indulging in great food, it’s easy to get caught up in the excitement. However, with all that cheer often comes something less festive, and that is holiday debt. If you love going all out this season, the cost of gifts, food, and decor can quickly add up. Many Canadians head into January with post-holiday bills that leave them feeling stressed and deflated. The good news is that with a little planning and smart habits, you can enjoy the season without wracking up holiday debt. Here are some practical ways to keep your holiday spending in check!

Create a realistic budget for the season

The best way to prevent holiday overspending is to stop it in its tracks. To do that, you should create a solid budget before the season really kicks off. Start by deciding on a total maximum amount you want to spend this month, then break it down into categories like gifts, decorations, and food. Now, the real challenge is sticking to these targets. A helpful first step is to pull out your existing items such as lights, wrapping paper, and ornaments. This prevents you from buying things you already have, which is a very easy mistake to make. For gifts, consider setting spending limits with friends or family. This way, everyone feels comfortable with what they can afford to spend, and no one feels pressure to go overboard. When you plan your budget and spending ahead of time, you can focus more on the fun of the holidays, and less on the stress of money.

Don’t get drawn into unnecessary deals

As you head out to do your holiday shopping, you will run across endless promotions. Things like “buy two, get one free” offers are very common, especially on more expensive items. On the surface, these holiday sales can make it feel like you’re saving money. However, these promotions are designed with one goal in mind, and that is to get customers to spend more. Before you grab that marked-down air fryer or holiday decorations, ask yourself if you were already planning on buying the item in question. If the answer is no, put the item back! On the other hand, sometimes you will find something you actually need at a discounted price. In this case, you’ve found a great deal. 

Shop with purpose

It’s essential to shop with purpose rather than emotion and impulse. Wandering aimlessly through stores is one of the easiest ways to blow your budget. You will soon discover how quickly window shopping turns into actual spending. Holiday displays are designed to catch your attention and encourage impulse buying. Without a clear list, you may find yourself grabbing things you don’t need or cannot comfortably afford. Before heading out, make a list of exactly what you need to buy. Only visit the stores that carry those items, and resist unnecessary browsing. Being intentional with your shopping helps you spend less money, and it also saves you time and reduces stress during a chaotic season.

Skip out on new credit

It’s no secret that retailers double down on their promotions during the holidays. You’ll likely be offered store credit cards where you shop, often with an appealing discount attached. While it might seem like a smart move at the moment, opening new lines of credit can end up costing you far more in the long run. High interest rates, annual fees, and the temptation to spend will all add up. That initial discount on your holiday purchases can quickly transform into a financial burden. Applying for new credit can impact your credit score, which is something you want to protect if you’re planning a big move like purchasing a home. Steer clear of new credit offers, and focus instead on spending what you’ve already budgeted.

At the end of the day, the holidays should be about spending time with friends and family, and not the material aspects of the season.  By setting a budget, shopping with purpose, and avoiding new credit, you can start the new year free from holiday debt, which is the greatest gift you can give yourself. Keeping your financial health in mind means setting yourself up for a season filled with more cheer, and less stress. Plus, if you’re thinking about a big move like buying a home, avoiding holiday debt now is critical! Enjoy the season ahead, and be sure to reach out to your mortgage broker when you’re ready to take the next step.

If you have any questions about your mortgage, give us a call at Centum Home Lenders! You can reach us at 506-854-6847, or get in touch with us here.