How to avoid going into debt over Christmas Holidays

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With the holiday season fast approaching, many Canadians find themselves less excited about the Joys of Christmas and more anxious about the debt that follows into the New Year.  According to a 2013 article on CBC.ca, Canadians – on average – spent or planned to spend close to $1200.00 on Christmas, a slight increase from the previous year.  This year, Canadians are expected to spend nearly $1500.00, with the highest priced gifts on most wish lists averaging $711.00[1].

On average, Canadians owed just under $16,000 in personal debt after the 2013 holiday season. All of this amounts to greater stress during the holidays and – by nature – a less than Merry Christmas. There are many practical ways to save money and properly budget for the Christmas Holidays without turning into Scrooge.  Whether you are trying to avoid the massive credit card bills in January or finding a way to still enjoy the holidays in the midst of a consumer proposal or personal bankruptcy, here are a few tips to help you budget and save this Christmas Season.

Tip # 1: Search for Cash Flow  

One of the biggest hurdles many people face during the holidays is setting a budget for gifts. Most people often neglect setting aside a bit each month to put towards the holidays, and instead find themselves with an inflated budget leading into the New Year. If you find it tough to put some money aside each paycheque, consider bringing in a bit of extra money by sell old clothing, books or toys to stores like Once Upon a Child or Plato’s Closet – and even used book stores and pawn shops. While you might only get somewhere between 15% and 25% of what you originally spent on it, you’ll not only be creating additional cash flow, but providing an opportunity for those less fortunate – who often rely on these type of stores through the holidays – to enjoy the season as well.

Another option is to turn your points for gas or other retailer rewards cards into gift cards that can be used to purchase gifts when the big ticket sales are happening, such as Black Friday or Boxing Day. By simply saving your points from gas purchases or purchases at retailers with rewards cards throughout the year, you can prevent yourself from overspending during the holidays. You can often redeem them for restaurant gift cards, retail chains and online stores. Gas cards themselves make excellent stocking stuffers for university and college student.

 Tip # 2: Budget & Pay Cash

A recent Bank of Montreal survey shows that 57% of Canadians admitted to making impulsive purchases when holiday shopping.[2] If you want to avoid overspending during the holidays, make a budget and stick to it.

It is always good practice for those holiday shopping on a budget to plan your gifts ahead. By doing so, you can make note of your holiday expenditures and only spend what you have to. A good way to do this is to put the cash aside for each gift into envelopes with the name of each person you’re getting a gift for on the front. This way, you only spend what you need, and avoid additional purchases that can contribute towards credit card debt.

You can avoid many impulse and extra purchases at Christmas by sticking with your budget and not falling into trap of “Keeping up with Jones” Much of the need to increase spending during the holiday season has to do with the influence of social media and advertising. Keep in mind that retailers have an immense impact on what the holidays “should look like”, thus creating an environment of materialism driving consumers to get the newest and biggest fade that drives their bottom dollar.

With a specified budget in hand, you allow yourself to keep your eyes open for the best deal on the gifts you need.

At its roots, the holiday season is about giving and togetherness. The biggest thing you can do for someone during this stressful season is to just wish someone a happy holidays, and to be there to celebrate it with them. It’s often our love for our friends and family that makes us want to give them a memorable holiday. At Don Allen & Associates, we have a number of online budgeting tools to help you budget and keep out of debt.

If you find yourself with credit card debt following the holiday season, you should turn to a bankruptcy trustee to see what your options are. At Don Allen & Associates, we can guide you in the correct path to clearing your credit card debt, whether it is through bankruptcy or a consumer proposal. Contact us today for more information.

[1] – http://www.cbc.ca/news/business/canadian-consumer-debt-levels-up-21-rbc-survey-shows-1.2287364

[2] – http://www.yorkregion.com/news-story/4227418-financial-adviser-warns-you-not-to-go-into-debt-during-christmas-season/

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