How to game the system to stay out of holiday debt

How to game the system to stay out of holiday debt

How to game the system to stay out of holiday debt

It's easy to be festive and forget about your budget during the holiday season. Here are my best tips for gaming the system and keeping your finances on track.

How to game the system to stay out of holiday debt

    According to this report, Americans will spend up to $730.7 billion during this year's holiday shopping, an increase of 4.2% compared to their spending in 2018.

    Unfortunately, what ends up happening after all the fun and merriment that goes on around Christmas is that people become saddled with debt as they enter the new year.

    Here are some eight strategies I have used over the years to save for the holidays and remain debt-free.

    1. Stick to your budget and savings plan

    The starting point for your holiday planning is to create a budget.

    List your essential monthly expenses (needs) and income to find out how much money you normally have leftover for discretionary spending.

    Calculate how much money you will spend during the, gifts, food and charitable giving. I find that it helps to make a shopping list with dollar amounts.

    Then, create a savings plan that includes details of how you plan to save up the money for your holiday purchases. Don't forget to give your budget and savings plan some breathing room for unexpected expenses that may arise.

    Now that you have created a budget, be determined to stick with it. A budget only works when you actually use it to guide your spending and saving.

    2. Bank your holiday savings

    If you start saving for the holidays early in the year, use time to your advantage by putting your funds inside a high-interest savings account that pays you worthwhile returns. The $20 or $30 you earn is extra cash you can put towards gifts.

    Also, you can consider using an automated savings plan such as the ones available through online banking platforms or through spare-change savings apps.

    Automating your savings increases the chance that you will actually follow-through since you no longer need to depend on your memory.

    For example, If your budget shows that you need $1,200 for your holiday spending, simply divide $1,200 with the available number of weeks to arrive at your automated weekly savings amount.

    3. Find ways to cut your expenses

    When your budget is tight, think about trimming down or cutting out some of your non-essential expenses.

    Here are some money-saving strategies:

    • Pack your lunch and eat out less often.
    • Cut cable or downgrading your plan.
    • Re-negotiate a lower rate for your internet and cell phone bills.
    • Take the bus or carpool with colleagues.
    • Cancel unused magazine subscriptions and gym membership.
    • Purchase groceries in bulk and shopping for what's in season.
    • Weatherproofing your home to reduce energy losses and to save on your hydro bill.
    • Plant a vegetable garden in summer.

    4. Use cash back apps

    Use one of the readily available and free cash back apps to save on your grocery and other shopping. Some of the ones I have used are Checkout 51, Drop, Ibotta and Rakuten.

    Cash back apps like Checkout 51 and Ibotta send out new cash back discount offers every week. When you purchase any of the offers in-store, simply upload your receipt to qualify for cash back.

    For Rakuten (formerly Ebates), you qualify for automatic rewards when you shop in-store or via the app.

    You can use the Drop app to earn cash back without needing to upload a receipt. Simply connect your credit and/or debit card and when you shop at any of their partner stores, cash back is automatically credited to your account.

    5. Increase your cash flow

    There is only so much you can do to cut your expenses and tighten your budget. Find extra money by taking on a part-time job or try one of these side hustle ideas.

    The additional income does not only help fund your holiday shopping, but it can also help to build up your retirement savings and emergency fund.

    Popular side jobs available in today's gig economy include pet-sitting, dog-walking, driving for Uber, blogging, and renting out your spare room on Airbnb.

    Also, you can free up some cash by decluttering and selling your unwanted or unused belongings online e.g. on Facebook Marketplace and Craigslist) or hold a yard sale.

    6. Maximize credit card rewards

    A good cash back rewards credit card returns money to your wallet. I earn hundreds of dollars every year from using my credit cards.

    Find a good credit card that offers rewards you find useful. This can be in the form of cash back, free groceries, travel rewards or premium insurance coverage. If you plan to do most of your shopping at a particular store, find out if they offer a rewards credit card that amplifies your rewards.

    I often redeem my accumulated credit card rewards in December to offset a large part of my holiday spending.

    Don't forget to use your credit card wisely. Pay off your entire balance in full every month to avoid interest fees.

    7. Shop sales and start early

    Keep your holiday shopping list handy and monitor prices. Some retailers allow you to set price alerts on their website and send you an email when an item is on sale.

    Use online price-comparison websites to sort out the bargains available at multiple stores.

    If you are making multiple purchases online at the same store, combine your orders and take advantage of free shipping.

    Some of the best deals are available after the holidays. Consider stocking up on gift wraps, decorations, lighting and other holiday necessities that become dirt-cheap after the holidays. This will save you some money in the coming year.

    8. Pay off debt

    End the year in great shape by paying down your debts. Start with your credit card balance and pay it off in full, if possible. If you have any extra funds left, put it towards paying down your other high-interest debts first.

    You will thank yourself when you write down your New Year's resolutions and don't have to think about dealing with the previous year's lingering debt.

    If you overspend during the holidays and have debt on your plate, plan to pay it off as soon as possible. And, start budgeting early in 2020 so you can avoid making the same mistakes in the New Year.

    What tips and tricks do you use to maximize your money over the holiday season? Let me know in the comments!

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    Enoch Omololu

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    Enoch Omololu is a veterinarian by day and a personal finance blogger by night at