It’s easy to spend more than you plan to during the holidays. Keep your eyes on the prize. If your goal is a higher credit score, spending more than 30% of your credit limit could cause your credit score to drop. If your goal is saving money, using credit for purchases could mean finance charges in the long run. Stick to these 5 tips to avoid getting into holiday debt so that you can reach your financial goals.
- Set spending limits: Make a list and a spending plan before going shopping to avoid extra purchases.
- Don’t buy it if you can’t afford it: Seems simple enough, but some purchases can be tempting. Only charge what you can afford to pay off the next month. Otherwise, you’ll be paying financing costs well into the new year.
- Consider ways to cut back on current expenses: It’s never too late to start saving a little extra. Whether it’s giving up a morning coffee for a few weeks or cutting back on cable, small changes can help offset some holiday costs.
- Save on purchases: Check for coupons or compare online to make sure you’re getting the best deal. Apps like GeoQpons can help you save on purchases at many retailers on-the-go. You may also have unused gift cards you can cash in toward purchases.
- Share the costs: Consider doing a gift exchange instead of buying gifts for everyone on your list. Or suggest a potluck meal if you’re doing the hosting.
If you are forced to use your credit card for expenses, make a commitment to paying off that debt in the first few months of 2015, so that you can stay on track towards your goals. Remember that the best gift is often not wrapped with a bow, but is time spent with family and friends.