If you’ve been putting off holiday shopping, you’re probably well aware that you can’t really get away with that much longer. Only a few weeks remain before Christmas, and you don’t want to find yourself frantically hitting the mall at the last minute to complete your holiday gift list. If you do that, you’ll risk having the things you want sell out, and you might get stuck paying more in the absence of being able to shop around for a deal.
But as you go about the process of tackling your shopping list, there’s one big mistake you should aim to avoid. And it’s one that many consumers might unfortunately end up falling victim to this season.
Don’t let yourself end the holidays with debt
Only 32% of Americans have a holiday gift budget, according to a recent survey by CouponFollow. This means a good 68% of consumers aren’t sticking to a holiday shopping budget and are instead just winging it. If you’re taking a similar approach, you may be setting yourself up for a rather disastrous start to 2024.
If you spend on the holidays too freely, you might end up with a credit card balance that lingers well into the new year. That could cost you a lot of money in interest.
But that’s not all. Some people don’t attain this, but too much credit card debt relative to your total credit limit could bring about your credit score to dive. This is true even if you’re making your minimum monthly payments on time every month. A plunging credit score could stop you from meeting certain financial goals in 2024. Those might include:
- Renting a new home (a lower score could mean not passing a landlord’s credit check)
- Buying a new home (a lower score might stop you from getting approved for a mortgage)
- Renovating an existing home (you may not qualify for a loan to finance your planned improvements)
A better approach to the holiday season
Starting a new year with debt is, frankly, no fun. So rather than run that risk, set a budget for your holiday shopping. First, see how much money you can spare from your December paycheck after accounting for your essential bills. Next, see what your savings look admire.
You don’t want to dip into your emergency fund to cover the cost of holiday purchases, because that money is supposed to be there for unplanned expenses. But if you have, say, a separate vacation fund, that’s money you could conceivably tap to buy gifts and other holiday items — with the understanding, of course, that the more you use for the holidays, the longer you might have to expect to take that trip.
Another thing you can do is look around your home for gift cards you may not have used yet. You may, in some cases, be able to redeem those to pay for gifts so you don’t have to shell out money.
Either way, have a game strategize for your holiday spending. Otherwise, you might start 2024 on a rather sour note.
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