How to Avoid Taking on Massive Debt While Holiday Shopping

If you are going to avoid racking up a huge amount of debt while holiday shopping, you will absolutely need to set a budget and stick with it. The key is to be flexible within the budget. Set an overall number that you don’t want to exceed. Then, map out all the people that you need to buy for, instead of mapping out each gift. By making it about the people and not the gifts, you can be flexible if you find alternative gifts on sale or for cheaper. Even if you go over by a little, at least you know what your limit is and can stay close to what you are willing to spend.

Focus on using the cards that will keep your holiday spending debt to a minimum. Many credit cards have a 0% intro APR, which means you can hold off paying off the credit card for at least a year without accruing interest. You can also use credit cards that have special 5% rewards in categories like online shopping or for major department stores. That way, you are getting major cash back for all your purchase. Here’s a good list we put together of the best credit cards to use for holiday shopping.

No matter how good 0% financing for 2 years on that new couch sounds, avoid signing up for store financing. Why? Two reasons. First, it can hurt your credit score. Store financing is often reported on your credit report as a “loan of last resort,” which can generally drag down your credit score. Second, you don’t get flexibility. Sure, you get 0% financing on that couch, but what about the coffee table that goes with it that you are buying from a different store? Use a 0% intro APR credit card instead. They often have the same 0% interest period (one year to a year and half) and can generally improve your credit score instead of destroying it. Also, you can use the credit card to buy anything from any store.

Black Friday and Cyber Monday are not the only times that major sales happen during the holiday season. In some cases, more affordable products are deeply discounted during the holiday season, so you don’t need to camp out for that massive flat-screen TV that you don’t even need. Keep an eye out for the smaller sales and try to plan your shopping list around stores that are offering the deepest discounts. Simple. Thrifty. Living. has a great list of stores that are having online sales as we speak. Check it out here.

And above all, don’t impulse shop. Your friend Deb doesn’t need the extra set of serving trays on top of the crystal pitchers you already bought her. Step away from the unneeded holiday gifts and stick to the game plan. And happy shopping, everyone!