It’s the most wonderful time of the year, the time for holiday cheer! Put those increasing interest rates behind you and think about the magical time this holiday season brings us, gathering with friends and family. Perhaps those rising interest rates and inflation costs are not what you were hoping to receive in your stocking this year, but that doesn’t mean you can’t enjoy buying gifts for your loved ones or celebrating around the tree. You may however need to sit down and think about your finances instead of breaking out the credit card and buying the first item you see for a distant co-worker. To help keep debt under control this holiday season I’ve put together this ultimate holiday debt avoidance guide so you can still afford milk and cookies for Santa (and carrots for his reindeer) on Christmas Day.
In 2021, the average Canadian household spent about $970 on Christmas presents, $595 on decorations, and $546 on food last Christmas. That’s an average of $2,111 per household. As much as the holidays give us plenty of joy in handing out presents, it also adds lots of financial stress leading up to, and especially after, the holidays. Before you run to Walmart or hit that checkout button on your Amazon account, take a second to think about your purchases and follow these savvy tips.
1. Don’t be subject to peer pressure.
Sure, it may be fun to agree to every Secret Santa in your work division and friend group. But even a $20 spending limit can add up. Most of the pressure around the holidays is the feeling of being obligated to give presents to everyone. A simple hand-written card with a candy cane is still a nice gesture to your distant mutual friends this holiday season. It means you are thoughtfully thinking about them, without breaking the bank. And, know that it’s ok not to give gifts at all if that’s the choice you make. If someone physically gives you a gift, that doesn’t mean you have to spend the same amount of money on them or that you have to give a gift in return unless you want to. This year focus on a more thoughtful, meaningful present that helps prevent you from mindlessly buying and giving.
HOT TOP: Handmade gifts like a tin full of cookies is a great return gesture to those that give you unexpected gifts and you know if they don’t go to a special someone they aren’t likely to go to waste.
2. Use the “4 gift rule.”
As a parent, how long do you keep buying your adult children Christmas presents? Think about doing the “4 gift rule” for your children. Give each child one thing they want, one thing they need, one thing they can read, and one thing they can wear. This will help you reduce the number of presents you are buying and helps prevent you from overspending during the holiday rush.
3. Build a better budget
Sit down and actively plan your Christmas shopping before you spend a penny (or, I guess a nickel) on any gifts. With so much pressure over the holidays, it’s easy to accidentally overspend and keep racking up your credit card. Take time to decide how much money you have available to spend during the holiday season. Keep in mind how many people are on your gifting list (family, friends, co-workers, teachers), and plan for what presents you want to purchase. Make a spreadsheet in a journal, on an app, or even in your notes folder on your phone as a reference and cross them off as you find the perfect gift being careful not to add to it instead.
4. Celebrate the holidays without gifting presents
It sounds cliche, but most of the best gifts don’t carry a price tag. Just showing up and spending time with friends and family is enough to celebrate the holidays. Offer to help decorate, bake dessert, or offer to cook the turkey. Or better yet, if you’re hosting a dinner, turn it into a potluck so everyone can contribute to the feast. Thoughtful gestures might just be the key to winning someone’s heart this holiday season.
5. Consider group gifts
Need to buy your boss a present, but you don’t know how much to contribute? Involve your co-workers and buy your boss the newest office chair on the market, or their favourite bottle of expensive wine they always talk about. Split the costs, and you will be spending less than you would have by purchasing gift cards for them.
HOT TOP: Have a large extended family? Consider doing a large Secret Santa instead!
4. Buy with points
Do you have gift cards from LAST Christmas that you haven’t used up yet? I’m sure you’re guilty of this! Stop into that store and see if you can pick up any gifts on your list. Check your points cards and see if you have any free rewards this holiday season. $20 can go a long way! Plus, check your credit card to see if you’ve accumulated any cash-back rewards to use towards your purchases as well.
5. Start planning for next year with a Tax-Free Savings Account (TFSA)
A TFSA is a savings account that was created by the federal government back in 2009 to motivate Canadians to save money by putting it aside and gaining interest. Any interest withdrawn from the account is tax-free. You put your money into the account, and it grows over time. Plus, you can add and withdraw at any given time without a penalty.
Don’t wait until the last minute to do all your holiday shopping after you just spent your paycheck on a brand new ugly Christmas sweater you just “HAD” to have. Start investing today and you’ll have saved up that $2,111 for next year in no time. If you plan ahead, you can avoid going into debt.
6. Refinance your mortgage and think about debt consolidation
If your debt has added up a little more this year or this holiday season, you may be able to take the financial weight off your shoulders by consolidating these debts into your mortgage. You’ll pay a smaller monthly amount than you would without consolidating multiple loans with various interest rates. If you’re worried about the risks involved with refinancing your mortgage or consolidating your debt, I can help you decide which choice is best for you! With my knowledge and years of experience as a professional mortgage broker, and as your financial advisor, I can show you how to make the most of your money and your investments while saving crucial dollars this holiday season. It’s time you start worrying less about your debt. If making a change to your mortgage has crossed your mind lately take advantage of current interest rates ahead of the holiday season knowing they may go up even higher in the near future. Book a meeting with me today by giving me a call at (705) 315-0516 now.