2 Holiday Debt Traps and How to Avoid ThemDec 06, 2017
For parents and grandparents alike, shopping at the holidays can be expensive when you want to give your kids or grandkids the best gift possible. Debt can seem like an afterthought when you’re looking for that special holiday moment.
FOMO (the fear of missing out) may have a lot to do with it.
During the holidays, we’re all inundated with advertising about happy holiday moments. Electronics stores try to sell us on the “best Christmas ever,” suggesting that the best moments for your kids come from getting the best, most expensive stuff.
Before you know it you’ve succumbed to holiday FOMO — that trap that has you rationalizing big purchases that lead to debt in the new year.
Instead of adding to your debt, here are three tips for avoiding those traps and keeping FOMO at bay this holiday season.
First, avoid payday loans. A new report suggests that payday loan stores are preying on indebted parents during the holiday season, going after the guilt complex created by all that holiday FOMO.
There’s serious dangers to payday loans, though. High interest rates and repayment in a short period can lead to more loans, which create a vicious cycle of debt.
Second, explore debt solutions. Even though it’s the holiday season, it’s never a bad time to explore solutions for existing debt. Debt relief options for your existing debt, like a consolidation loan, can help make your holidays (and your budget) easier to manage.
A good place to start with any discussion on debt relief (or any common debt questions) is with a Licensed Insolvency Trustee (LIT). Take a short break for the holiday rush for a “debt check-in,” where an LIT can outline solutions, provide advice, and suggest a clearer plan for December spending.
Third, find thrifty solutions instead. Not ready to give up on that big expensive gift? Instead of each person buying a present, pool your money with grandparents, aunts, and uncles for that one gift. Or encourage your child or grandchild to save for that big ticket item by giving them a gift card or opening a savings account with some starter cash. (The latter is a great way to teach them money skills too!)
There are plenty of ways to have a more frugal Christmas, and avoid taking on additional debt. This article from Hope and Cents outlines 51 tips, including the commitment to a cash-only holiday, or just being open with friends and family about your decision to cut back.
How do you avoid adding to your debt over the holiday season? Is FOMO a problem in your family? Join the conversation on social media by using the hashtags #DebtSolutions and #HolidayDebt.