Holiday shopping is one of the most common reasons people get in over their head with debt. In fact, in 2016 the average American went more than $1,000 into debt just during the holidays alone. The holiday shopping season is underway. So how do you stay out of debt this holiday season without shortchanging the ones you love? This article is a must read for anyone who likes being extravagant during the holiday seasons, but went further into debt last year than they meant to.

The Reality of Holiday Debt

Holiday spending is one of the biggest reasons Americans go into debt. Nearly half of Americans will take four months or more to pay off all that debt, with nearly 12% opting to make only the minimum monthly payment. This means the debtor will take several years to pay off their debt at great cost. Those interest payments could be better spent on a retirement plan, a family vacation, investments or even more gifts for the holidays.

Put simply, that holiday spending could be what’s making your finances suffer all year round. If you’re looking for the spending habit that’s making it difficult to stay out of debt, year after year, you might not have to look any further than holiday splurging.

An article from Money Magazine reports that in 2016, the average American added more than $1,000 in debt due to holiday spending.

One Way You Could Stay Out of Holiday Debt

Staying out of debt during the holiday season is actually a lot easier than you might think — or at least a lot simpler. Ask yourself one question: How much debt did you accrue last holiday season? Look at your credit card statements from last year’s holiday season and see how much you spent. That could be where you found yourself going into debt and spending more than your budget could afford.

From there, it’s just a question of budgeting for that overspending. The problem isn’t necessarily that you’re spending too much. It’s that you’re failing to budget.

One tactic you could use to budget is to take the amount you went into debt last year and divide that number by 12. Every month, put that much money aside in a special savings account. That could be big part of your holiday spending budget for the year. You could be able to lavish as much on your family and loved ones as you did last year. You could also be able to stay out of debt with your holiday spending this year.

Note that this amount isn’t your entire holiday spending budget. You can spend more. The credit card debt that you may have experienced was just what you spent that you couldn’t really afford. Budgeting for excess spending for this year’s holiday season could decrease the chances that you’ll go deeper into debt this holiday season.

Budgeting in advance will allow you to treat your family, but also to sleep at night. What better gift to give yourself this holiday season than to stay out of debt?

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