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How can I manage holiday spending and avoid credit card debt?

Overspending during the holidays can feel like an inevitability. As much as you try to stick to a budget, you end up spending more than you anticipated. While it may feel good in the moment to be giving gifts to your loved ones, the long-term effect of debt can be crushing.

Here are five tips for managing your holiday expenses during and after the season.

1. Limit the scope of your debt

Many of us carry multiple credit cards and it can be tempting to stretch out the debt by using as many as possible. But it may actually help with repaying your debt if you use one credit card. The statement can look daunting, but repayment could be simpler.

If you do use multiple credit cards, consider prioritizing the repayment of one card before paying off the next, rather than paying a little bit off every card. Studies have indicated that consumers who focus on one credit card payment at a time are more successful than those who spread out the payments.

2. Prioritize repayment wisely

If you do use multiple credit cards during the holidays and need to decide which card to focus on first, consider starting with the one with the lowest statement balance. That may seem counter intuitive, but studies have shown that the satisfaction of paying off a debt helps consumers pay off all debts more quickly. The mental burden of debt is lifted when one payment disappears.

3. Bare bones beginning in the new year

As much as you can, consider cutting extra expenses in January. One fewer pizza day or trip to a coffee shop, don’t go to the movies, anything you can to help set aside more cash for debt repayment.

4. When it’s available, pay off the debt

Many cards will allow you to make more than one payment during each billing cycle, so as money becomes available, pay off the card. If extra cash comes your way, put it toward debt.

5. As much as possible, reduce gifts

It’s hard not to overindulge on presents for people you love, especially if you have little ones in your life. But as much as you can, try not to purchase too many things this season. It won’t damage your relationship with those kids and could be better for them in the long run: Experts say kids who get everything they want may grow up to have poor spending habits. By not indulging every want they have, it teaches them prioritization, making trade-offs and mitigating expectations.

Whether you can withhold spending too much or end up going into debt this season, there are ways to manage your finances and come out on top again after the holidays.

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