Personal Finance

5 things to do now to avoid holiday debt

It might be incredibly annoying to hear "Jingle Bells" in stores before Columbus Day, but when you think about it, retailers might be doing you a favor.

Putting off shopping until the last minute could land you in a holiday debt cycle where you spend beyond your budget, rely on your credit cards to make up the difference and pay off the balances during most of the following year.

"People in America are pressured to spend more than they can afford," says Beverly Ladley, executive vice president at SunTrust Bank, "and a big part of that is waiting until the last minute."

Many people have already gotten a head start, according to a survey conducted in early September. It found 14 percent of U.S. consumers -- about 32 million people -- had begun holiday shopping by early September . And, about 4.6 million overachievers said they had already finished (aren't you jealous?).

To get started on your own holiday game plan and start off 2016 free of holiday card debt, here are some expert strategies to try this fall.

1. Cash in card rewards for gift cards. When is the last time you checked your accrued card rewards balances? Leslie H. Tayne, an attorney specializing in debt management and debt resolution and author of "Life & Debt," says doing so could jump-start your holiday shopping list. "While you should not be charging just to rack up rewards, if you have a decent amount of rewards already accrued, consider using these to your advantage," she says.

Try this: Many issuers will allow you to redeem points for retailer gift cards, which always make for easy gift giving. Consider ordering these soon, however, as they could take some time to ship.

2. DIY while there's still time. "Some of the most meaningful gifts I've gotten have been scrapbooks with photos from a certain period of time," says Ladley. "They're not expensive, but they do take time." Especially if you have a talent or hobby, such as knitting or graphic design, you could create gifts for at least a few of your recipients, saving you a few bucks, but also showing how much you care.

Try this: Go on Pinterest for some DIY gift idea inspiration. If you're into giving handmade crafts or homemade goods, hit up your local dollar or craft store and keep an eye on clearance racks to stock up on supplies.

3. Don't fall into the "biggest sale of the season" trap. Before you know it, fliers and emails will come rolling in with promises of huge future sales, but that's no reason to put off shopping now. "Know the going rate for certain things you want," says Ladley. This will help you avoid what she calls the "markup to mark down" factor, which describes the retail practice of making something that's regular priced appear to be a bargain. She recommends using apps, such as SlickDeals Price Tracker, Camelcamelcamel (which watches Amazon prices) and PriceZombie, that monitor fluctuating prices and allow you to comparison shop so you don't fall for a false "lowest price" claim.

Along those lines, you also have to resist the urge to splurge if you do stumble onto a big sale, says Michele Boyer, wealth strategist at Off the Grid Investments in Parker, Colorado. "Waiting until Black Friday often ends up being a budget black widow because we justify overspending when we get a great deal." Plus, she says, if you use credit and spend the next year paying off the debt, you'll negate all of those great deals pretty quickly.

Try this: Stores offering an interest-free layaway program can be a great way to shop early and manage your budget since they allow for you to pay a little over time toward a big-ticket item for a modest fee, says Tayne. And by all means, if you see something in your travels that would make for a great gift, there's no reason why you shouldn't snag it early. Spreading out your purchases will help your cash flow, plus you'll be able to make progress by crossing someone off your shopping list. Keep those receipts, too, since some retailers honor price adjustments should the price end up dropping after you buy.

4. Create a holiday-specific budget. "On average, people spend $800 during the holiday season. At 100 days out, that would mean saving $8 a day in order to have cash on hand to manage your expenses," says Ladley. Finding wiggle room in your budget is probably easier than you realize if you're willing to make some small sacrifices, but some hands-on calculating is required.

Try this: To figure out your holiday budget, determine how much you can afford to spend out of pocket, and compare that total to a list of everything you anticipate buying during the holiday season, says Kevin Gallegos, vice president of Phoenix operations for Freedom Financial Network. Don't forget to factor in oft-forgotten expenses such as cards and postage (hint: consider free e-cards if your budget is tight), travel, special holiday outfits, year-end tips for service people and gifts for teachers, coaches, etc.

5. Only give what you can afford. It sounds simple, but how many of us actually follow this rule? "Do not give what others think they deserve, a gift equal to what someone gave you last year, enough presents to make a ski slope-sized pile under the tree or whatever unrealistic measure might be luring you toward overspending," says Gallegos. Sure, we want to show our love and generosity through gift giving, but think about this: Would your loved ones really want you to suffer financially so they can receive a bigger gift? Doubtful.

Try this: Instead of buying everyone in your large, extended family a present, draw names instead. That plan has worked well for Boyer, who along with her two siblings, have three children each. The adults don't exchange, and each child now buys a gift for just one of his or her cousins. This decision means each family buys just three gifts instead of 12. "It gets to be a lot of fun because it engages the kids to really think about what that one person will love. And when we get together, it's more about the experience of getting together than the gifts."

Another idea is to consider shopping on local Facebook group buy/sell pages or at garage and yard sales (while those are still in season). Especially with younger kids who might want a bicycle or a scooter, you can get high-quality, barely used items for a fraction of the cost, and they won't know the difference, says Boyer.

Although you probably won't get all of your shopping done before Halloween, taking these steps now will help you avoid the crazed holiday crunch that often leads to foolish impulse buys in December. Even better, smart planning for the holidays can keep you off the spending "naughty list" indefinitely, says Ladley. "Once you get on a savings plan for the holiday, keep it up to build a safety net and nest egg throughout the entire year."

See related:Retailers roll out layaway plans early for 2015 holidaysPoll: How long it will take to pay off holiday debt

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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