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5 Tips for Staying Out of Debt This Holiday Season

The holiday season is a difficult financial time for many people, but it can be especially difficult for those who are divorced, going through a divorce, or are single parents. Everyone wants to buy lots of gifts for those they love - it's fun and rewarding to see the look of joy on your children's faces when they open a gift they've been asking for all year!

However, going into debt to buy gifts this holiday season can leave you even more financially strapped over the coming year, and cause extra anxiety and stress. Financial experts continually remind us of the dangers of debt at this time of year. So, we are bringing you 5 tips for staying out of debt this holiday season.

1. Don't open store credit cards. Many people are convinced to open a store credit card in order to get a discount of approximately 10 - 15% off of their purchase. However, there are many issues with opening a new store credit card to shop for the holidays, but probably the biggest issue is the interest you will pay. Some store credit cards charge as much as 25% or so in interest, or offer deferred interest. While many have the best of intentions as far as paying off their balance before their no-interest deadline arrives, sadly, most do not, and end up paying outrageous amounts of interest in addition to their purchases. That makes for some extremely expensive gifts! We encourage you not to adopt a buy-now, pay-later mentality. If you absolutely have to revolve a balance, use a card with the lowest APR you can find.

2. Start your shopping early - or late! Most retailers don't want you to know this, but Black Friday sales aren't all they are hyped up to be. A recent survey found that that several other shopping holidays including Labor Day, Memorial Day , July Fourth, New Year's Day, Columbus Day and President's Day all offer a higher overall percentage of discounts. And another survey found that electronics are actually cheapest in early December!

One advantage of starting your shopping early is that you don't have such a large outlay of cash all at once. If you can space out your purchases some, it will be easier on your pocketbook and you won't have to deal with the crazy holiday crowds!

3. Try gift card exchanges. If you plan on giving a gift card for the holidays, check out a gift card exchange site. You may not have heard about them, but there is a secondhand market for gift cards. At sites like PlasticJungle.com and GiftCardRescue.com, you can buy gift cards that other people don't want, at a discount. A quick glance at one of the sites shows that you can buy a gift card for the full face value, but you pay anywhere from 6% – 25% less. The card offerings vary from day to day on these sites, but a quick check turned up discounts on retailers like Best Buy, Chicos, Tiffany, Home Depot, Macys, and Sports Authority. The percentage off any given retailer varies widely among sites and even among sellers on the same site, so it pays to do some comparison shopping?

4. Check out the Dollar Store. We're not suggesting that you buy gifts here, although you might find some great, cheap stocking stuffers! Dollar stores can be great sources for inexpensive wrapping paper, gift bags, greeting cards and decorations. And, if you do a lot of entertaining around the holidays, you can find disposable flatware, plates, tablecloths and such. After all, it doesn't get much cheaper than $1.00!

5. Use credit card rewards. Many people who use credit cards these days have cards with points or miles reward programs. Take a look at your redemption options to see what your options are. Some programs allow you to use your points/miles to buy gift cards, or merchandise directly from a list of cooperating merchants. The options vary widely between cards, so you'll need to do some research to find out if your card has this type of program and what they offer. But, the point here is instead of racking up debt by using those cards for your purchases, consider using your points to buy gifts!

Every January you will typically see lots of advice from experts on how to recover from holiday overspending. This year, we encourage you to be proactive and develop a strategy for staying out of holiday debt in the first place. And of course don't forget that the holiday season is not just about gift giving. It's also about making memories and spending time with friends and family.

(Source: 6 Ways to Stay Out of Debt This Holiday Season, TIME magazine)

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