Wrapping Up the Year: How to Avoid Holiday Debt

Woman outside a store window looking in holding a shopping bag

Winter always comes much sooner than we expect. Before we know it, stores will be changing their décor from red leaves and pumpkins to stockings and snowflakes. With the onset of the cold months, planning for the holidays will be a top priority—and that means shopping for presents, decorations, and food. As your shopping list grows, it can be hard to picture getting through the holiday season without increasing your debt.

In 2021, the average holiday spending per person was $1,131. These heavy costs can likely make you rely on your credit card(s) to make it through, adding to your existing debt. If you’re saving for other big milestones—like a home or your child’s college tuition—spending this much for a holiday can feel overwhelming, leaving you to find other options for making it work.

One approach that people might consider is debt consolidation. Essentially, this is when you borrow money at a lower interest rate to pay off existing debt with a higher interest rate. That way, you ultimately reduce the amount of interest you pay overall. But while that may sound like a convenient way to handle your spending, it isn’t the most fiscally-conscious approach.

If you don’t have a monthly, long-term plan to pay off your loans, entering into debt consolidation can generate a bigger debt problem than you had in the first place. This can put a bigger strain on your bank account, making the holiday season an even bigger headache. Added to that, having multiple lines of credit can negatively impact your credit score, raising a red flag to lenders when it comes time to apply for a mortgage or student loans.

The holidays are meant to be a time of joy and merriment and the risk of using debt consolidation can only put a damper on your celebrations. Instead, focus on bringing down your spending as you head into the holiday season.

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Did you know? Citadel Credit Union offers a holiday savings account.

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Holiday Shopping Tips

Shopping smart now is easier than handling debt for years to come. We’ve put together some tips and tricks to help you do just that.

Start Shopping Ahead of Time

If you start your holiday purchases early, you’ll have more time to really think about what you’re buying and find the best value for money in off-season deals. By planning ahead of time you’ll also be able to take a look at your finances and put together a spending budget that makes the most sense for you and your family. This will also help you set a holiday allowance for your children as they plan their gifts for you and your partner.

Look for Deals

Hunting for a bargain is a muscle many people like to flex when Black Friday rolls around, so bring those skills over into holiday shopping as well. Subscribe to newsletters from stores you know your loved ones enjoy so that you can take advantage of sales and one-time deals. You can also browse e-commerce stores like Amazon to find cheaper prices for big wishlist items. Alternatively, if you feel there’s a gift that sits outside your budget, share the cost with someone else in your family—you’ll save them having to come up with another gift idea.

Opt for Heartfelt Gifts

Meaningful, hand-made gifts are often less expensive than the big items they might have on their wishlist and will mean more to them come Christmas morning. Focus on something like an inside joke, or a favorite picture of the two of you, and build from there.

At Citadel Credit Union our member care team understands the pressure that comes with this time of year. Let us help you save and come up with financial strategies that work for you.

Discover more personal finance tips to help you this holiday season.

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