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It’s magical to feel this time of the year. But that magic comes at a cost. Each year, there is pressure to spend more on perfect holidays. You could end up with a lot of debt from this high-cost season. NerdWallet’s 2022 Holiday Shopping Report shows that 31% of U.S. holiday shoppers who used credit […]


It’s magical to feel this time of the year. But that magic comes at a cost. Each year, there is pressure to spend more on perfect holidays.

You could end up with a lot of debt from this high-cost season. NerdWallet’s 2022 Holiday Shopping Report shows that 31% of U.S. holiday shoppers who used credit cards to purchase gifts have not paid off their balances.


You may be able avoid holiday debt with some planning. There are ways to minimize the financial damage caused by holiday debt if you exceed your budget or have credit card balances.


1. Get started with a plan

Start with your budget, gift list and grocery list. If you host parties, a grocery list is also helpful. Shopping apps and extensions for web browsers can help you track price trends, compare prices at different merchants and find coupon codes to earn cash back.


Online shopping makes it easy to spend too much. This is due to the ease of online shopping and the improved user experience on merchant websites.


“All these companies are trying to make it the fastest and most friction-free way for people to buy things,” said Emily Rassam (senior financial planner at Archer Investment Management, Charlotte, North Carolina). Rassam reduces her spending by adding items to her cart when she sees them, but only reviewing the contents of the cart once per month before making a purchase decision. You may take a little longer between finding the items you want and buying them. This can cause you to second-guess your selections and make it easier to remove some items from your cart.


2. Be on the lookout for hidden costs


You can’t overlook the little things that add up like gift wrap and decorations. You can reuse what you have. Rassam suggests looking for deep discounts immediately after the holidays are over.

Host parties for hungry guests are becoming more costly. According to the Bureau of Labor Statistics, food costs at home rose 12.4% between October 2021 and October 2022.


Budget Bytes founder Beth Moncel suggests that you stick to simple holiday menus that are affordable. Classic recipes are easy to make, don’t need fancy ingredients and still taste great. Moncel shared his email saying that butter can make any recipe a little better, especially if you add a bit more butter. “A little butter can make any recipe better !”


3. For the new year, create a plan to repay your debts


Add paying off holiday debt to your New Year’s Resolutions list if you find yourself in holiday debt. You can take a few steps to keep yourself motivated.

  • Balance transfer credit cards or personal loans can help you reduce interest payments. These products may help you pay less interest depending on the terms you get, but they don’t address why you are in debt. These products can be useful as you work to reduce your debt.

  • Reduce costs and tackle debts. Start the New Year by reviewing your bank and credit card statements. You can use any savings made this way to pay your credit card bills. Use any cash bonuses or cash gifts you receive at work to reduce your debt.

  • Get help: Nonprofit credit counseling agencies and financial professionals can help you to see the whole picture of your finances so that you can make informed decisions. Although it can be difficult to deal with money issues on your own, impartial advice can help you get started.


4. Plan for next year now


Heath Carelock is the program director at Prince George’s Community College, Largo, Maryland’s Financial Empowerment Center. He cites his mother in law’s dedication year round to holiday planning as a way of avoiding debt. She starts saving for holidays as soon as New Year’s Day. She tries to get all her Christmas gifts bought by August .”


Carelock recommends that shoppers take advantage all year long of holiday sales. Carelock suggests that you wait until the sale is over before making a purchase.


Spreading your holiday spending allows you to compare shop, find deals, and not rack up too many credit card fees quickly. Carelock states, “It’s a slow burn rather than a conflagration.”



This article was originally published by The Associated Press and was written by NerdWallet.