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How to Pay Off Holiday Debt

Canadians spent an average of $1,610 in 2012 during the holidays, which included gifts, trips, entertaining and other expenses, according to a report in The Globe and Mail.   The biggest over-spenders were in Atlantic Canada where 35% of the population overspent, while the most money conscience provinces were Alberta and Quebec.

We have listed 5 ways to pay off your holiday debt sooner rather than later.

1. Pay off debt in order of interest rate.  Pay off the credit card with the highest interest rate first.

2. Stop incurring new debt.  Start using cash and debit so you can see how much cash you actually have.

3. Return or sell unwanted gifts.

4. Sell unwanted gift cards or store credit.  If you can’t return unwanted gifts for cash or can only get store credit, sell them at a discount to friends, family or online.

5. Transfer balance to a lower interest rate card.   If you can’t pay off your balance on your credit card consider transferring the balance to a low or 0% credit card, then destroy the old one!

Start 2014 off on the right foot and avoid holiday overspending.  A well-planned budget, creativity and some preparation are key to enjoying a joyous occasion with friends and family without going in the red.  In order to avoid overspending during the holidays, follow these tips to help you stay in budget and debt-free.

1. Cut your gift list. Consider doing a gift exchange where you draw names of members of your family/friends and set a budget for each person.  Your budget will be cut dramatically, if you focus on just spending on one person, plus it will also save you hassle of tackling the malls during this busy season to shop for multiple people.  The spirit of the holidays has become very commercialized by retailers and it is the time spent with loved ones that truly count.

2. Get creative with your gift giving.  Presents do not necessarily need a monetary value, so why not make your gift this year.  Some crafty ideas include tin of cookies, a photo album, or babysitting services to name a few!  The possibilities are endless when you start brainstorming.  People place more sentimental value into homemade presents, and it is more meaningful to give a gift from the heart instead of gushing over the latest iPhone or gadget.  Spending more isn’t always necessarily better.  Another idea is to give the gift of education instead of buying a tangible present.  For as low as $20 a month, you can purchase an RESP towards your child’s post-secondary education.

3. Stick to a budget.  Set out an amount dedicated towards each person and stick to it!  Gift cards are increasingly popular as they come in fixed denominations that doesn’t allow for overspending.  For 100 popular gift ideas under $20 click here.  Quirky ideas include a leather piggy bank, MacBook decal, and a herb saver to name a few.

4. Look for deals.  By spending some time and searching for promotions ahead of the holiday season, you can make some great savings.  Take advantage of the Black Friday and Cyber Monday deals well before you need the gifts in December.  The week leading up to Christmas is also another great time to start bargain hunting.

5. Use cash to pay for purchases instead of credit cards to avoid accumulated debt and interest.  Cash is a great way to control your spending as it is easily tracked.  Just be careful to avoid all the ATM fees charged by banks other than your own.