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Millions of Americans have an overwhelming amount of debt, and during the holidays, many consumers spend more than they have. Don’t fall victim to overspending and accruing debt this holiday season. You can still love and celebrate the holiday season without overspending on holiday gifts, food, decorations, lights, and entertaining. After all, the holidays are a time to gather with friends and family and to be grateful for what you have!

We compiled the ultimate holiday survival guide to get you through this season of giving without going into debt. Here are five tips to help you spend wisely and protect your finances.

1. Create a Holiday Budget

You might be tired of hearing about budgeting, but if you’re serious about not overspending this holiday season, you should make a holiday budget. It’s important to be realistic—don’t make guesses if you can avoid it. Look back on how much you spent last year to guide you as you create your budget, and see where you could cut back.

The key to staying on budget is proper organization so you can have a holiday season that’s free of financial stress. When it comes to gift giving, be sure to make a list and check it twice. Don’t feel pressured to give to friends or extended family if your budget doesn’t allow it.

2. Use Cash

It can be discouraging to start off the New Year already behind on the eight ball in money matters. To avoid a financial hangover in January, you may want to consider using cash or a debit card for your holiday purchases—instead of a credit card. By having cash on hand when holiday shopping, you will be less likely to go over budget. You’ll be forced to spend only what you have available as opposed to a large credit line.

If you do plan to use a credit card, remember that you’ll have to pay interest on your purchases if you don’t pay the entire balance in full. Be sure to add due dates to your calendar for each of your credit cards and schedule a reminder on your phone. Overdue payments can hurt your credit score and push you further into debt with late fees.

Additionally, learn to prioritize your bills. Pay off the card with the highest interest rate first—otherwise you’ll pay more over time. You should also consider dropping any retail credit cards after you’ve paid them off. These tend to have the highest interest rates and limited benefits.

3. Plan Ahead

Last-minute shopping is stressful, and it can also be costly. If you’re in a rush, you’re more likely to forget about your budget and instead grab what is most convenient. Taking the time to research the best deals, sales, and prices can save you time and money. Try spreading your holiday gift purchases throughout the year, in place of doing it all in December.

4. Get Creative

If your budget doesn’t allow you to buy for everyone you would like to this year, a great alternative is a holiday grab bag. With a grab bag, everyone buys a few small gifts to wrap and throw into a bag or a box, then each participant randomly picks one gift at a time until all the gifts are gone. Anyone who would like to participate should agree to a price that fits into everyone’s budget and how many gifts each person should buy. This is not only frugal but also fun!

If you’d rather stick to traditional gift giving, get creative with it. Try making do-it-yourself projects or crafts—a homemade gift is much more sentimental than a store-bought one anyway. For your children’s teachers or coaches you would like to include in your holiday list, consider gift cards, home-baked goodies, or both combined. Gifts don’t need to be lavish to show someone you appreciate them.

5. Implement Damage Control 

If it’s too late and you’ve already overspent this holiday season or are already in deep credit card debt, don’t panic. There are ways to recover and do damage control after the holiday season is over.

The most important thing of all is committing to paying off your debt. It might be easier to simply continue your regular spending habits and pay the minimum balance when you remember. But giving debt priority, even when it’s an insignificant amount, will do wonders in helping you maintain good financial health.

With all the new items you’ve received during the holiday season, you might have some older things you can sell. Clothes, electronics, and even books could earn you a little extra cash to help pay off your debt. Amazon, eBay, and your local consignment shops or thrift stores are fantastic venues for selling your unwanted stuff.

Take a look at your budget and make sure you set aside enough money each paycheck to make at least double the minimum payment. But if you can manage it, you should aim to pay much more than that. Fine-tune your budget to see where you can cut back so you can make more substantial payments to your credit cards. The sooner you’re out of debt, the sooner you can start putting that money where it really matters.

Don’t let your finances take a major hit this season. Follow these tips to avoid overspending, and keep an eye out for other common holiday pitfalls. By building more frugal shopping habits, you can also improve your credit score. If you’re curious about how your credit’s faring now, take a free look at your credit score through Credit.com.

Image: gilaxia 

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