TUCSON, Ariz. (KOLD News 13) - With reductions in the size of social gatherings this holiday due to COVID-19, many are compensating by buying gifts for their loved ones.
According to a recent national survey conducted by TopCashback.com, consumers may find themselves ringing in the new year with holiday debt.
The survey found that 44% of Americans will be charging their holiday expenses on credit cards this year, with 24% taking one-to-three months to pay it back.
But there are ways to manage those expenses, according to the site.
The website advises consumers to immediately pay back at least 54% of total costs after purchase. In the following one-to-three months, pay off 24% percent of the costs; and then finally pay off the remaining balance during the months left leading up to the new year .
Amongst those surveyed, 56% said they felt pressured to spend more money on holidays gifts in 2020 than they were confortable with. While 44% said they felt no additional pressure.
42% of those surveyed said they expecetd to spend anywhere from $100-500 on gifts for loved ones this year; 28% said they expected to spend between $500-1000; 15% expected to spend between $1000-2000; and 9% said they expected to spend $100 or less.
Cosumer Expert Rebecca Gramuglia with Top Cashback offers the following four tips to help you pay back holiday debt and budget accordingly:
- Reexamine your budget. If you’ve gone a little over budget during the holidays, don’t worry — get back on track and consider adopting the 50/20/30 rule. This easy rule splits your finances up so you can actively contribute to each category. Spend no more than 50% of your after-tax income on essentials, like rent/mortgage and utilities; 20% on any financial priorities such as holiday debt and savings; and 30 percent on any lifestyle choices such as last-minute shopping and splurges.
- Pay off debt strategically. Once you have your budget in place, it’s time to take the 50/20/30 rule and break down the financial priorities section even further. Start by evaluating how much you owe and how much you are paying in interest. Then, strategically pay off debt by adopting the debt avalanche method. With the debt avalanche method, you can pay off debt by interest rates instead of accrued balances. By making minimum payments on all of your debts, while focusing on the highest interest rate first, it becomes a cost-effective method. And as each debt gets paid off, its minimum payments get added to the monthly payments for the next high-interest balance on your list. Once you get to the last debt on your list, you’ll be eliminating large chunks out of it each month, speeding up the debt payoff process.
- Start the new year off with smart shopping choices. The new year is a great time to shop end-of-year/season sales to score discounts on holiday decorations, winter apparel and more. If you find yourself shopping these sales, make sure to stack coupons and credit card rewards, as well as shopping through a cashback site, like TopCashback.com, to earn a percentage of your purchase back in cashback to score major deals.
- Plan for next year. To avoid overspending next holiday season, keep a record of what you spent this year. You can always adjust next year’s shopping list accordingly, but having a number of how much you spent can keep you in line to not go over budget.