8 steps to a debt-free holiday season

Getting through the holidays without going into debt can be tough. During the 2018 holiday season, consumers racked up an average of $1,230 in debt, according to a survey by MagnifyMoney. However, a majority of those surveyed said they didn’t head into the holiday season expecting to have to rely on credit to cover their costs.

With the 2019 holidays approaching quickly, the question is whether many will find themselves using credit again to get through the season of spending. The good news is that consumers can avoid racking up debt by taking steps now to build cash reserves and to keep holiday costs under control.

1. Do it yourself to cut costs

To set aside cash for the holidays, start by identifying unnecessary costs you can eliminate now. In addition to the usual targets – meals out, weekly happy hours or the gym membership you’re not using – look for the not-so-obvious non-essential expenses you can cut.

“You may think that you’re living lean, but you’re probably paying someone for something that you could do yourself,” says Trae Bodge, a shopping expert at TrueTrae.com. “Car wash? House cleaning? Manicures? Skip a service or two for a couple months, and you’ll save enough for at least a few gifts.”

2. Save your change, literally

Remember when you were young and diligently put change in a piggy bank to save enough for that toy you wanted? Don’t dismiss this old-school savings tactic now that you’re an adult because it still works.

“Put a big jar by the door and have everyone in the family drop their change into it every day,” Bodge explains. “In no time at all, you’ll have built yourself a little holiday gift fund.”

3. Set up automatic transfers to savings

To make saving for the holidays easy, set up automatic transfers from your checking account to a savings account. “Begin transferring small amounts of money on a daily or weekly basis that you won’t miss — say, $5 or $20 depending on your budget,” says budgeting expert Andrea Woroch.

And for every unnecessary expense you cut, include the amount of that expense in your automatic transfer to savings. “This helps you build up enough cash to cover those holiday purchases come December, or at least give you a needed budget bump,” Woroch explains.

4. Help your savings grow faster

Choosing the right savings account can help your holiday savings grow faster. “This means, don’t leave it sitting in a traditional bank,” Woroch says.

Instead, opt for a high-yield savings account. For example, the average savings account offers an annual percentage rate of 0.10%, you can find some high-yield savings accounts with rates of more than 2%, according to Bankrate.com.

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5. Cash in on clutter

You don’t just have to cut costs to build holiday savings. You also can generate extra cash to set aside. One of the easiest ways to do this is by going through your home to find things you’re no longer using and can sell. “This is an especially good idea for your kid’s playroom since you’re likely to get a bunch of new toys from family members,” Woroch says.

To sell your unwanted items, take advantage of an auction website such as eBay. To price them right, look for similar items that recently sold online, Woroch says. “You also want to time the sale right,” she notes. “Schedule it to go live when more people are likely to shop. Think after work — 5 p.m. to 8 p.m.” Or you could use a site such as decluttr.com to sell books, CDs, DVDs, games, cell phones, tech items and even LEGOs without the hassle of an auction.

If you want to sell large items, you’re better off selling those locally through Craigslist, OfferUp or the Facebook marketplace, Woroch says. Stay safe by meeting with potential buyers at a public place during daylight hours.

6. Consider a side hustle

A side hustle is a great way to earn extra holiday spending cash, Woroch says. Plenty of retailers hire seasonal workers. Plus, you likely can get an employee discount with a retail job, which could help you save money on gifts.

If you’re reluctant to give up your nights or weekends for a part-time gig, there are plenty of side hustle options that offer more flexibility. “For instance, you can make up to an extra $1,000 a month just by watching someone’s pet in your own home whenever it’s convenient for you through sites like Rover.com,” Woroch says. You could use a site, such as Sidehusl, to find gigs that fit your schedule and skill set.

7. Spread out holiday purchases

In addition to building savings and earning extra cash, you can avoid going into debt during the holidays by starting your shopping now. “Buying some gifts early allows you to spread out your shopping across multiple pay periods,” Bodge says.

Plus, there are plenty of opportunities to score deals in the coming months. For example, you might be able to find deep discounts on some items on your list if they’re part of summer clearance sales. Sales during long holiday weekends such as Columbus Day also are a good time to find discounted items. “Just make sure you’re keeping a running list of gifts you buy for different people on your list, so you don’t double up accidentally when you forget a gift you bought pre-season,” Woroch notes.

8. Discuss gift expectations with family and friends

One of the biggest benefits of getting a jump-start on your holiday planning is that you have time to talk with friends and family about gift expectations. You could suggest drawing names rather than exchanging gifts with all family members and friends, Woroch says. Or you could propose that the adults in your family buy gifts only for the kids instead of for everyone.

By agreeing to reduce the number of gifts you give, you can help yourself and your friends and family spend less and avoid going into debt this holiday season.

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Cameron Huddleston is the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. She also is an award-winning journalist who has been writing about personal finance for more than 17 years. You can learn more about her at CameronHuddleston.com. Opinions are those of the author or the person interviewed.

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