How You Can Budget Your Holidays

Holiday gift giving has proven to be a debt creator for many Americans. According to CNBC, Americans racked up an average of $1,054 in debt over one holiday gift-giving season.

If minimum payments of $25 a month were made on that debt, it would take about five years to pay it off — and about $500 in interest.

The writers at the personal finance website Mint.com have recommendations that could save you from going deep into debt during the holiday shopping season.

Eliminate, or restrict, gift spending

This sounds harsh, and downright Scrooge-like. But when you talk to friends and family, you could see how many people struggle to pay for gifts. You might be surprised to see how many people on your gift list are open to this idea.

Make a list of every holiday expense

This is not just gifts. You should list gift exchanges and any sort of contribution to an office holiday party, extra tips for service workers during the holidays, travel, greeting cards and decorations. Small expenses add up, so list even something that cost you $5 or $10.

Make a reasonable budget

Compare the figures from your budget to your current monthly spending. Do you need to give up something from your budget to make the holiday spending work?

Tap into your holiday savings account

You should start saving for holiday spending as early in the year as possible. You actually can get started now by figuring out how much you spent this year over the holiday season. Take that number and divide it by the number of paychecks you expect to receive between now and next holiday season. That’s how much you’ll need to set aside from every paycheck to pay for holiday gift giving.

If you have to borrow, stray from credit cards and the higher interest rates that come with them. Many credit unions, like RBFCU, extend holiday loans among their personal loan offerings with lower rates and reasonable terms.

Loans are subject to credit approval. Your specific rate and term will be dependent upon you credit rating and other factors. Rates and terms are subject to change without notice. Some restrictions may apply. Contact the Consumer Lending Center for complete details.

Information in this article is general in nature and for your consideration, not as legal, tax or investment advice. Please contact your own legal, tax, or financial professionals regarding your specific needs before taking any action based upon this information.