3 Steps You Can Take Now to Avoid Holiday Debt During the Pandemic
Image source: Getty Images
It's common for people to rack up some amount of debt during the holiday season. Between travel, parties, gifts, and decor, the amount you spend in December alone could result in an uncomfortably large credit card balance.
That holiday debt is less than ideal at the best of times. But during the pandemic, it's crucial to steer clear of debt. Even if you're still earning the same paycheck, our economy is stuck in a recession. If you happen to lose your job in the near term, it could be months before you're employed again. The less debt you have, the more financially secure you'll be as we approach 2021. We can only hope the new year will bring a better turn of events and more prosperous times for all. If you make these key moves now, there's a good chance you'll escape the holidays without a whopping credit card balance.
1. Book your travel early
Many people are changing their plans for the holidays this year -- namely, they're not traveling due to safety concerns. But if you're forging forward with family visits, you may want to book your flight or accommodations in advance. Prices tend to climb around the holidays and flight availability could be limited. If you book now, you're more likely to not only get a good deal, but also find the itinerary you want.
2. Start saving for gifts and other expenses
Chances are, you'll change some of your plans this holiday season. Maybe you won't host your annual holiday party and you take it easier on the gift-giving front. Either way, now's the time to tally up your anticipated expenses and start socking funds away. If you think you'll spend $600 on this year's holiday season, save $200 a month for the next three months. That way you won't be scrambling in December.
Another thing: The lifestyle changes imposed on you by the coronavirus crisis may be money savers. For example, if you're working remotely, you could bank your commuting costs. Seize the opportunity to take advantage of those savings well ahead of the holidays. That way you'll be able to pay for your expenses up front and avoid taking on debt.
3. Start scoping out sales
Being an organized shopper could help you lower your expenses this holiday season. Many people wait until Black Friday to start buying gifts, but you may actually find that certain items are cheaper before the so-called peak sale season kicks off. Make a list of the people you plan to shower with gifts and jot down some ideas for each one. Then, search for those items online so you can compare prices and see if a deal pops up.
Here's another trick: Some online retailers will lower the price of items stored in your shopping cart automatically if they decrease before you complete your purchase. As you find gifts for the important people in your life, add them to your carts. Keep tabs on those carts to see if your totals, or individual line items, drop. If, for example, you put a $30 item in a cart on Oct. 30 and come Nov. 15, the item has dropped to $15, you'll know to pull the trigger on it.
The U.S. economy is truly a mess and many people are struggling financially. As such, it's imperative that you do your best to stay out of debt -- even if your personal finances haven't taken a hit thus far. Getting through the holidays debt-free will help you start 2021 on a financially healthy note. Perhaps it will set the stage for a new year of smart spending and increased savings.
Our credit card expert uses this card, and it could earn you $1,148 (seriously)
As long as you pay them off each month, credit cards are a no-brainer for savvy Americans. They protect against fraud far better than debit cards, help raise your credit score, and can put hundreds (or thousands!) of dollars in rewards back in your pocket each year.
But with so many cards out there, you need to choose wisely. This top-rated card offers the ability to pay 0% interest on purchases until late 2021, has some of the most generous cash back rewards we’ve ever seen (up to 5%!), and somehow still sports a $0 annual fee.
That’s why our expert – who has reviewed hundreds of cards – signed up for this one personally. Click here to get free access to our expert’s top pick.
The Motley Fool owns and recommends MasterCard and Visa, and recommends American Express. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.