It might still be shorts weather, but now’s the time to start planning your holiday spending budget to avoid ringing in 2015 with debt.
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“Saving money and spreading out holiday purchases overtime and in the months leading up to the holidays will ultimately alleviate potential budget strains while reducing stress and reliance on credit,” says money saving expert Andrea Woroch. “Most people overlook the costs for entertaining, decor and travel on top of the gifts when creating their holiday budgets, so knocking out some of these needs in advance will help you avoid pilling on unmanageable debt.”
Before you start your shopping, the National Foundation of Credit Counseling (NFCC) recommends consumers have a clear idea of their financial situation. For instance, you should know how much you owe on each credit card, review your credit score and work to create savings earmarked for holiday spending.
“In a perfect world, shoppers would enter the holiday spending season debt free and only charge what they can afford to pay in full when the bill arrives,” says Gail Cunningham, a spokeswoman for NFCC. “Short of that, a person should never charge more than they can repay within three months. Spreading the spending out over several months means that all of the bills don’t arrive at once, making it easier to manage debt.”
If you’re looking to beef up your holiday savings, here are four tips from experts:
Tip 1: Sell Your Stuff
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One person’s junk is someone else’s treasure, which is why you should think twice before tossing out those pants that are too small or that old leather jacket. There are a host of websites that make it easy to sell unwanted items.
To start, Woroch recommends clearing out your closets and identifying gently-used clothing, accessories, shoes and home goods that can be sold. If you’re not the online type, she says to head over to the local consignment or pawn shop to see how much you can get for the items. Any cash you earn from those sales should be stashed away for your holiday shopping.
Tip 2: Cut Your Monthly Costs
Cutting out coffee can help make small reductions to your budget, but according to Paula Pant, operator of the affordanything blog, you get a bigger return when taking on bigger bills like reducing your homeowner’s insurance, gas or cell phone bill. “You can find some of the best savings from things that aren’t quite visual or tangible,” says Pant. “Shopping around for cheaper car insurance is not visual, but it can literally save you $200 or $300 a year.”
Tip 3: Shop Early
Last-minute shopping often leads to over pending. To avoid that happening this year, Woroch recommends shopping early and spreading your list out. She says shoppers can take advantage of summer clearance sales to save on gift giving as well.
“Those who buy a bunch of gifts at once are more likely to swipe their credit cards and have trouble paying off as interest accumulates,” says Woroch.
Tip 4: Get a Part-Time Job
It’s not seasonal hiring time at retailers yet, but that doesn’t mean you can’t raise money now via a part time job or side gig. Woroch says people can raise a lot of holiday spending cash by taking a part-time job at a retailer or restaurant.
If you’re short on time, but have a skill, consider consulting on the side to earn some extra cash.
“Keep in mind, working at a department store will get you a nice employee discount to help save even more on gifts,” notes Woroch. “If you want something with less of a commitment, help people with their daily errands by searching for one-off gigs at TaskRabbit.com or post your professional skills for service at ELance.com and provide some consulting.”