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How to Avoid going into Debt this Holiday Season

Borrowing money for the holiday season is no misnomer for many American families. American families are holiday-debt constantly being bombarded with retailer’s advertisements of buying, and fighting the buying temptation can be difficult.

Statistics show that nearly 1 in 10 families borrow money to spend on Christmas gifts and those same families are unable to pay their bills at the end of month in December.

Many of these same individuals or families, who will possibly face the harsh reality of not being able to pay their bills, will rely on Advance Tax Refund Loans in January.

So the roller coaster of accumulating debt begins in a new year. In order to practice healthy spending habits and keep your personal finances sustainable for the holidays, here are 8 tips to keep you debt free:

1. Pay with cash and limit debit card usage – Cash is king, paying with cash will eliminate overspending that can occur with a debit card.

2. Don’t use or max out credit cards to buy gifts – A credit card balance of $500 at an interest rate of 18% will take 7 years to payment off by making the minimum payment of $10.

3. Don’t skip paying bills to buy presents – Avoiding to pay bills to buy gifts will put an individual in further debt some late fees can be pricey and exorbitant.

4. Prioritize your gift list – Put a set amount of money for gift purchases, and initiate a secret Santa plan with friends and extended family.

5. Utilize retailer’s coupons – Use retailer’s coupons on and offline to maximize sale price items.

6. Check out online retailers for deals – some retailers have exclusive deals only for online shopping, focus on websites offering free shipping and free returns.

7. Do not take a loan out of your 401k – a 401K is not a liquid savings account for immediate use, loans paid back are done with after tax dollars defeating the tax deferral feature.

8. Start contributions for the Christmas club – some community banks and credit unions offer Christmas club accounts for customers, consider making contributions in January to avoid year end overspending.

Orginally appeared on: africanamericanmoney.wordpress.com

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