Revolving debt rose $4.8 billion in August. What does that mean for the holiday shopping season?
Back to school is only the second most expensive shopping season of the year for families. According to the National Retail Federation, parents spent about $684.7, on average, this year to send K-12 students back to school. College students spent $942.17. But even though back to school spending didn’t break records this year, Americans still added $4.8 billion in revolving debt in August, according to a report on NASDAQ. That doesn’t bode well as we head into the most expensive time of year for most households – the winter shopping season. So, what are families that are already strapped for cash supposed to do for avoiding holiday debt this year?
If holiday spending is even just on par with what we spent last year, the average family can expect to spend around $970 this year. That’s a big burden, especially if you haven’t been saving throughout the year to cover holiday spending with cash. If that big tab winds up on credit, it could mean that you’ll start 2019 with a lot of unwanted financial stress. Thankfully, there are still 65 days until Christmas, so you still have plenty of time to plan ahead so you can minimize holiday debt.
Holiday Budgeting Tips If You’re Already Strapped for Cash
#1: Total up what you spent last year
According to the NRF, the average household spending for the winter holidays last year was $967.13. But if you want a real measure of what you can expect to spend, then you need your family’s total from last year.
So, go back through your credit card and checking account statements to see what you ended up spending last year. Make sure to note what you bought, too, since this will give you an easy way to identify ways to cut back.
Once you know what you spent in total for 2017, you can start making your 2018 holiday spending plan to get ahead of the game.
#2: See what you can afford to skip or cut back this year
If you already know that you’re strapped for cash heading into the holiday shopping season, you can make plans to cut back.
- If you went overbudget decorating, commit to avoiding buying new decorations this year. Or, since you have plenty of time, before the holidays, you can get crafting and make some decorations. You can also arrange decoration swaps with friends or family where you agree to trade things out, so everyone’s yard and home can look freshly decorated.
- If gifts were the area where you overspent last year, you have plenty of time to make a gift list that will help you stay on budget this year. Talk it out with your family and agree to put a spending limit on everyone’s gifts this year. Limit by the number of gifts, dollar amount or both. And once you set your list, take it with you everywhere! Shopping off-list is how you end up overspending.
- If entertaining was your biggest unexpected financial drain, plan more effectively this year. Consider doing big family meals as potluck events or making your holiday party BYOB. Start planning meals so you can buy items in bulk and share ingredients between recipes. And think about limiting the number of guests and then counting portions accurately to avoid food waste.
- If you’re traveling, book your tickets now so you can find the cheapest flights and avoid holiday upcharges. Look into flying on discount airlines or going to a small airport to cut the cost of your flight. Stay with relatives and chip in a few bucks for groceries and utilities instead of paying for a hotel.
#3: Count your paychecks and save accordingly
If you’re on a bi-weekly pay schedule, then you have about 4-5 paychecks left before Christmas. Instead of putting all the financial stress on the last one or two paychecks before the holidays, you need to spread those costs out.
So, get a calendar or check the HR calendar at your office to see how many paychecks you have. Then, figure out how much you need to save to cover the holiday budget you’ve started to make if you followed Tip 1 and 2. You should save as much as possible over the next few paychecks. That way, you can pay for holiday purchases with cash or debit, instead of relying on your credit cards.
Also look for ways you can cut back a few expenses now, which will free up more money to save. Look at discretionary expenses first – those are your wants. There are usually plenty of small expenses that stack up that you may not even notice. If you can cut a few expenses back, then you’ll have more money to save for holiday spending.
- Eat out as a family less
- Take your lunch to work instead of going out
- Limit app store, movie streaming, and in-game purchases
- Cut back on going out on the weekends
- Cancel any services you haven’t used this year
- Limit streaming services to one service per media type
- Purchase any winter clothing you need now, then cut back clothing purchases
- Avoid impulse purchases anytime you’re out shopping
If your credit card spending is already out of control, don’t wait to rein it in. Talk to a certified credit counselor to find the solutions you need now.