My favorite part of the holiday season is buying gifts for loved ones. I’m our family’s chief current purchaser, and I take my job seriously.

Since our kids were born, I’ve spent substantial time picking fantastic Christmas gifts for everyone. By the most recent tech gadgets into an experience to New York City, I don’t surprise my family Christmas morning.

While the presents I gave brought joy to my kids’ faces, the credit card bills that showed up in January were significantly less than pleasurable. In recent years, I have learned how to buy thoughtful presents still while sticking to our Christmas budget.

I’m not alone in spending too much throughout the vacations. According to a 2019 Credit Karma holiday spending survey, 27 percent of Americans expected to incur debt. Of those individuals, 42% anticipated to carry on at least $500 of debt[1].

As a husband and parent of four teenagers, I want to spoil my family with gifts to show how much I really care for them, but it’s too easy to overspend, no matter what budget I set.

A Simple but Effective Method to Reduce Holiday Debt

If you are like I and you also took on debt during the holiday period, there are steps you can take to dig yourself out. Debt can hang about and ruin a lot of your strategies and your financing if you allow it. Here are some measures you may take to pay off your holiday debt and get back on track financially.

Step 1: Formulate a plan

You wish to start handling your debt how that you want most other barriers in life: come up with a solid game plan. First, you want a very clear picture of where you stand, so locate your credit card or bank statements. Add up all your holiday buys, from gifts and food to greeting cards and journey, to ascertain how much debt you’ve collected.

When you’ve taken inventory of your debt, then you can create a realistic plan to pay it off. It is good to look over your credit cards’ interest rates if you used more than 1 card to pay for purchases. 1 method you can use to repay your holiday debt is the debt avalanche strategy, where you repay credit cards with the maximum interest rates first. Another choice is that the debt snowball process, which entails prioritizing your debts from smallest to biggest.

Step 2: Reduce your spending

If you are serious about quickly paying your vacation debt, then you’ll need to find extra cash to place on your charge card balances. Cutting unnecessary spending will help create this surplus to pay off debt. You might even use a service such as Trim to go through your account to discover fresh subscriptions, services, or reduced invoices on your behalf.

You may also must make sacrifices to get where you want to be financially. It is not always easy to give up everything you love, but sometimes that’s what’s necessary to remove your holiday debt.

Step 3: Make more money

Cutting your spending might not be adequate. You may need to find extra sources for income to finish paying off holiday debt.

If available, you could work some overtime hours at your current job. Another choice is to pick up a part-time occupation or begin a side hustle in your free time to earn additional cash. In the event you receive bonuses from your work or are anticipating a tax return, these funds may go toward paying off debt, too.

Step 4: Get a balance transfer credit card

Another way to avoid mounting interest rates is to move your current credit card balance to a balance transfer credit card. They offer introductory 0% APR on balance transfers for extended periods, sometimes as long as 18 to 21 weeks.

When exploring balance transfer credit cards, then look for balance transfer fees. While there is no curiosity during the introductory period, many cards bill a 3-5% commission based on the amount you transfer to the new card.

If you go this route, make sure that you pay off the whole balance move before the introductory rate expires and you don’t use the card for any additional purchases.

How to Avoid It Next Year, Too

Holiday debt may seem as a part of life, but that doesn’t need to be the case. With some research and advance preparation, you may be prepared financially if the holidays come around again. Listed below are four action steps to take to avoid financial mistakes next holiday season.

Step 1: Plan ahead

It is amazing how much planning beforehand can help your holiday spending. Years before, my wife and I created a Christmas budget, also this very simple step revolutionized our holiday spending.

We created a list of everyone we buy gifts for and how we spend on these. The list comprises kids, parents, siblings, cousins, teachers, and anyone else that may warrant a gift. We divide this by 11 and put aside that amount every month to make sure we have enough to pay all our holiday spending from the time we need it.

To create your holiday budget, return at who you purchased presents for this past year and just how much you really spent. Ask yourself how much you may have to boost your budget or reduce the amount of gifts you buy. Do all those people even need presents? Use all this information to make a realistic budget. Establish spending limits for each person on your list. Don’t forget to factor in other expenses round the holidays, too.

To work out how much you will have to save every month, add up how much money you’ll want to pay all your holiday expenses and then divide it by the amount of weeks left in the year. As an example, if you’re putting together your budget in June, then you are going to split your total by six.

To make sure that you don’t touch your vacation money, set up a separate bank account for your budgeted funds. You might also pull cash from the bank account each month and use the envelope procedure. After the holiday season comes and goes, you’re going to be pleased that you took the time to plan beforehand.

Step 2: Shop year-round

Deals can be found all year, not only on Black Friday, Cyber Monday, and during the vacation season. When you come across a fantastic deal, buy it and save that item for Christmas. Make certain that you account for it on your vacation budget in the future.

Additionally, there are specific instances of the year you should buy certain products. If one of your children wants a bicycle, you will discover the best prices at the end of summer when new bike models come out. Based on what things are on your list, you may save money on Christmas by shopping prior to the holiday buying season.

Step 3: Get rid of present debt

Funding can put a damper on any kind of financial planning. Otherwise, you may be more inclined to add more debt from holiday spending. Based on a 2019 Credit Cards.com holiday debt poll, 51% of people with existing credit card debt believe the holidays are a legitimate reason to include more debt. For individuals with no charge card debt, that number drops to just 26%.

If you have any accounts on your credit cards or possess any loans, work hard to pay them off quickly. Make it a point to start the holiday buying season with as little cash as you can.

Step 4: Give DIY gifts

If you’re blessed with all the crafting gene, think about making presents for your nearest and dearest. This might not work for everybody on your list, but many folks would love receiving handmade presents. Spend some time on Pinterest or Instagram for inspiration and to find creative and original DIY ideas.

Even when you are not great with a glue gun or a professional painter, then there are plenty of crafty ideas that don’t require technical skills or tons of experience to create. Additionally, handmade gifts create a more private gift experience. Show your loved ones how much you really care by creating a gift that you know they will enjoy.