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Four smart ways to stay out of debt this holiday season

The fastest ways to slip into debt during the holidays — and any time for that matter — is to spend without a budget (not having a realistic plan) and then compound the issue by not tracking what you actually spent (not facing reality). The result is massive credit card balances that need to be paid in January to avoid high interest charges, and that’s hard on your bank account and your mental health.

Here’s how to make the holidays frugal, without being a Scrooge.

1) Tally it up and slash it in half

In my household, we don’t start shopping until we’ve drawn up a full list of what’s needed, for whom, and the expected price. And we don’t forget to include ourselves; holiday outfits, party tickets, grooming, makeup and the like. Then we slash that total value in half, and that’s our budget.

The dramatically reduced number forces my fiancé and I to get creative and find ways to stretch our dollars, and set gifting boundaries with our family and friends. Though it might seem counterintuitive, limiting everyone’s generosity, through a Secret Santa, for example, will reduce financial stress and the gifts tend to be better quality.

2) Pay for gifts with points, gift cards and exchanges

I have loyalty rewards for the retailers I frequent most often, and also on my credit cards. So, my go-to holiday move is to cash in my rewards for gifts and gift cards. There’s zero out-of-pocket cost to me, and I don’t have to worry about my points becoming less valuable as time passes. Next, I use up leftover gift cards towards gift purchases. Last, if I’ve received something that we don’t need, like a duplicate bathing kit for our newborn, I’ll exchange it for a gift that we can give to someone on our list.

Parents, some financial institutions will even allow you to cash in your points to make RESP contributions for your children, and education is an incredibly valuable gift.

3) Only buy quality gifts that are on sale

I try to stretch what I’m spending by taking advantage of sales and discounts. This is where research pays off. I check in-store and online specials and clip digital coupons. Just watch out for high shipping costs and exchange rates, and don’t sign up for any “buy now, pay later” plans because that’s just another form of debt.

This principle applies to experiences too; movie and theatre tickets, amusement park passes and the like.

4) Get crafty

Making gifts is a resurfacing trend thanks to inspiration from sites like Pinterest and YouTube cooking shows. At a minimum, why not make host and hostess gifts rather than buying another bottle of wine. If that goes well, try making other gifts.

As you spend, track every dollar using a spreadsheet (I like using Google because I can share it with my fiancé), and stop spending whenever you’re getting close to your budget limit. And just remember, the cheerfulness of your holidays doesn’t increase if you spend more.

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