In Your Debt: 4 Ways to Limit Your Vacation Debt

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dated: 2022-11-25 14:38:20 .

There is a magical feeling in the air this time of year, but that magic comes at a cost. Every year there is increasing pressure to spend more to create the perfect vacation.

This season of high costs can leave you with debt that sticks around. According to NerdWallet’s 2022 Holiday Shopping Report, 31% of 2021 US holiday shoppers who used a credit card to pay for gifts still haven’t cashed out their balance.

With a little planning, you may be able to avoid holiday debt. But if you’re over budget and have some credit card debt, there are ways to limit the damage to your finances.

1. START WITH A PLAN

Start with your budget and gift list, as well as a grocery list if you’re hosting parties. Shopping apps and web browser extensions can make it easy to track price trends, compare prices at different retailers, find coupon codes, and earn cash back.

Online shopping can facilitate overspending due to its convenience as well as improved user experience on retailer websites.

“All these different companies are trying to find the fastest and easiest way to buy things,” says Emily Rassam, senior financial planner at Archer Investment Management in Charlotte, North Carolina. Rassam suppresses the urge to buy by adding items to his cart as soon as he sees them, but only once a month does he check what’s in the cart and make a final purchase decision. Adding a little extra time between finding items and sitting down to buy them can make you reconsider your choices and then remove some items from your cart.

2. BEWARE OF AIR COSTS

Don’t forget the smaller details that add up, like decorations and gift wrapping. REUSE WHAT YOU CAN – For anyone holding old gift bags in the closet, now is their time to shine. Rassam recommends looking for deep discounts on these items right after the holiday season ends.

Hosting parties and hungry guests is also more expensive now. According to the Bureau of Labor Statistics, home grocery costs rose 12.4% from October 2021 to October 2022.

Beth Moncel, founder of Budget Bytes, an online resource for learning how to cook on a budget, suggests sticking to a simple holiday menu that you can prepare on the cheap. “Classic recipes are simple, don’t require fancy ingredients, and yet are absolutely delicious. Especially when you add a little more butter,” Moncel said in an email. “A little more butter is an easy and inexpensive way to make any recipe that little bit better!”

3. MAKE A DEBT PAYOFF PLAN FOR THE NEW YEAR

If you fall into holiday debt, add paying it off to your list of New Year’s resolutions. There are several steps you can take to stay motivated:

— REDUCE INTEREST PAYMENTS: Consolidate high-interest debt with a credit card or personal loan. However, keep in mind that while these products may help you spend less in interest (depending on what you qualify for), they don’t address the reasons why you went into debt in the first place. You can only be helpful if you try to pay for it.

— FIX YOUR EXPENSES AND ATTACK DEBT: Start the new year by reviewing your recent credit card and bank statements to see where you could save. Any savings you make this way can be used to pay with your credit card. If you received cash gifts or vacation pay at work, use those funds to pay off your debts.

— SEEK HELP: Financial professionals and nonprofit credit counseling agencies can help you see your full financial picture so you can take action. Solving your money problems alone can be difficult, but unbiased advice can help you get started.

4. START PLANNING FOR NEXT YEAR

Heath Carelock, program director for the Financial Empowerment Center at Prince George’s Community College in Largo, Maryland, cites his mother-in-law’s year-round dedication to vacation planning as a way to avoid debt. “They will start saving for the holidays from the New Year onwards. He’s trying to buy all the Christmas presents by August.”

Carelock suggests customers take advantage of Christmas offers throughout the year. If you know a sale is coming, he says, wait until then to buy.

Spreading out your vacation spending gives you more time to compare, find deals, and avoid quickly racking up credit card costs. “It burns slowly, unlike a wildfire,” says Carelock.

__________________________

This column was provided to the Associated Press by the personal finance website NerdWallet. Sara Rathner is a writer at NerdWallet. E-mail: [email protected] Twitter: @SaraKRathner.

RELATED LINKS:

NerdWallet: 2022 Christmas Shopping Report https://bit.ly/nerdwallet-holiday-shopping-report

METHODOLOGY

This survey was conducted in the United States by The Harris Poll on behalf of NerdWallet from September 15-19, 2022 to 2,075 American adults aged 18 and over, of whom 1,751 plan to buy gifts this holiday season and self-identified as “holiday shoppers.” . ). The Harris sample accuracy of an online survey is measured by the credible Bayes interval. For this study, sample data are accurate to +/- 2.8 percentage points at the 95% confidence level.

Bureau of Labor Statistics: Consumer Price Index Summary https://www.bls.gov/news.release/cpi.nr0.htm

Sara Rathner of Nerdwallet, The Associated Press

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In Your Debt: 4 Ways to Limit Your Vacation Debt

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