How to (Actually) Stop Overspending on Christmas Presents

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how to actually stop overspending on christmas presents

Here are the 5 steps you need to take to stop yourself from overspending on Christmas gifts

The excitement, the gingerbread latte is now kicking in … the click-clack of your shoes racing down Target’s floor tiles… as you frantically snatch the must-have toy of the season off the shelf, clutching it possessively to your chest!  

VICTORY!

As you round the corner trying to get back to the main aisle, you can’t believe your eyes; you haven’t seen this Magnolia item in stock in FOREVER! In your shopping cart it goes! Off to checkout, and you slooooow way down going by the girl’s section, and think, “That’s super cute! My little one would love that!” It too goes in the cart!

An hour later, and your phone bings at you. Yup, it’s a large purchase amount alert from your credit card. It reads, “Did you spend $358.42 at Target? This amount is over your alert limit notification settings”.

And just like in The Christmas Story, you say (in slow motion for dramatic effect) “Oh FUDGE!”

You totally overspent! Again! You told yourself you weren’t going to overspend on Christmas presents again! (like ever!) Last year’s holiday credit card bill left you with hives, and you promised yourself that this next year would be different!

Well, guess what, that Target scenario up above… it was just a dream. Just like Ebenezer, there is time for you to change your ways. You’re not doomed to follow the same path you did last year! So if you’re ready, let’s dive into how to stop overspending at Christmas!

how to stop overspending on christmas presents

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What is the Christmas Debt Hangover?

Ugh! No one likes a hangover! But unlike a hangover from too much bubbly, a Christmas debt hangover can last months and months (sometimes years)! No thanks!

According to a MagnifyMoney survey, “Americans took on an average of $1,325 of holiday debt in 2019”. Here’s how their numbers played out…

  • 44% of consumers took on debt this holiday season, and the majority (57%) didn’t plan on doing so.
  • 78% of those with holiday debt won’t be able to pay it off come January, including 15% who are only making minimum payments.
  • 58% of indebted consumers are stressed about their holiday debt.
  • 40% plan to consolidate debt and/or shop around for a good balance transfer interest rate, but more than half won’t even try. Of those that won’t try, 20% think it’s not necessary, and 18% don’t want to deal with another bank.

Now specifically regarding how long it would take them to pay off the debt, survey responders said…

  • 22% said one month
  • 21% said two months
  • 19% said three months
  • 8% said four months
  • 16% said 5+ months
  • 15% are paying only minimum payments

Right now, The Fed Reserve lists the average credit card interest rate to be 14.52%. You can generally assume that your minimum payment will be about 2% of your total bill. Here’s a screenshot of how long it would take to pay off the card (if you didn’t put any more purchases on it).

magnify money debt calculator
using Magnify Money’s credit card debt calculator

64 months? Paying $582 in interest? W.T.F.!

Are you ready to tame your shopping spree beast? Because, after looking at those numbers, overspending at Christmas is not cool!

How to stop overspending on Christmas presents: Step One – decide what you will focus on besides the gifts!

It’s just smart sense that when you take something away, you need to replace it with something else. Instead of a donut, have a whole grain muffin!  

So instead of focusing on gifts, what do you want to spend the season focused on? I’ve got a great list of frugal family fun ideas for the holidays!  These are bucket list items perfect for the holiday season!

You’re especially going to need something fun to do Christmas morning, as you don’t want the day to be anticlimactic without all the presents, as it might be hard on our littlest ones. Think about…

  • Doing a Meals on Wheels delivery route in your neighborhood.
  • Go caroling.
  • Do a Christmas movie marathon (pj’s required!).
  • Make a full holiday meal together as a family.
  • Go sledding/skiing/ice skating or go to the mountains for snow time fun! Don’t forget the hot cocoa and accessories for the snowman you’ll build!

Step Two – Consider a gifting strategy

Every good General knows that you need a plan of attack or a strategy, shall we say. And if you don’t think Christmas shopping is kind of like preparing for battle, then hats off to your peaceful and serene holidays of the past. The rest of us battle-weary moms can barely nod in agreement (as we’re still a little shell shocked from last year’s holiday season).

Strategy One – Adopt the 4 Gift Rule

This one is amazing in its simplicity to help you stop overspending on Christmas gifts! It caters to those toying with the idea of having a minimalist(ish) holiday, and it’s gaining popularity every year! You gift each recipient (that you would typically buy lots for) just four gifts.

  1. Something to wear
  2. Something to read
  3. Something they need
  4. Something they want

I’d like to think of it as a way to buy a more meaningful selection of gifts. As you’re looking not just to buy lots of things, but purchase specific items. Hopefully, the receivers will appreciate their gifts a little more and not get lost in the craze of ripping off wrapping paper at the speed of light.

Don’t forget to snag your printable gift list tracker; there’s a four gift rule one and then a classic gift list printable. Everything you need to stay organized and on budget!

christmas gifting list

Strategy Two – Give the gift of an experience

Maybe your kids have everything that they need! Maybe you are dreading anything more coming into your home as you need to get your Home Edit on right now!

If that’s the case, then consider giving an experience instead. This could be a short trip to the beach or a big trip to Walt Disney World. Or tickets to a sporting game or an event like Comic-Con. Go as big or as small as you like. Set aside the Christmas money and put it in a sinking fund to make this experience come true (even if it’s at a later date).

Hint: if it’s a trip to a theme park, some have vacation planning DVDs or online videos (DisneyWorld does). This would be a great thing to wrap and put under the tree!

Strategy Three – Go the D.I.Y. route

Now, this isn’t for those of us that are all thumbs (meeee!) I am not a crafter/knitter/artist/DIYer by nature. But for those of you that are, consider harnessing your talent for homemade gifts!

Even if you don’t have a talent, maybe consider gifting a custom photo book from Shutterfly. Or collect great grandmothers family recipes together and turn them into a little book (or place her most famous recipe on a tea towel! Cute huh!)

That’s right, as your mother always said, it pays to plan ahead! That means getting your Christmas present shopping done early! As the holiday gets closer, we tend to panic slightly; we grab just about anything that will do as a good gift. Most of the time that means we’re spending a little more (because we don’t want to get a cheapo lame gift)!

So start jotting down your gift choices now! Aka ASAP! I.e., immediately!

Okay, you get the drift. Besides, online ordering gets bigger every year, and sometimes there are shipping delays or snowstorms that stop service in half the country (yikes!) You don’t want to get a substitute gift because your original gift won’t be back in stock until January 17th!

Christmas Budget Workbook mock up

Step Four – Use Cash

They say cash is king, and they’re right! Especially when it comes to spending money. Because when the cash is out, the spending is done! It’s genius at its most basic, and it works every time (as long as you leave your credit cards at home). You simply cannot overspend on Christmas gifts!

Using cash envelopes is a strategy used by many successful budgeters! Besides, stuffing these cute festive holiday cash envelopes is fun! You can use one for each person you’re gifting to or use one for each holiday shopping category—I.e., food, decorations, gifting, fun times, supplies, etc. Or if you’re crafty here are some cash envelope templates that you can make on your own!

Nerdwallet references a cult classic report where, “An often-cited study is one conducted by Dun & Bradstreet, in which the company found that people spend 12%-18% more when using credit cards instead of cash.”

Don’t forget that when you pay with cash, you won’t have to pay interest on the charge either! Look at it this way; when you pay cash, you’re buying something. When you pay with a credit card, you’re borrowing the money for it; you didn’t buy it (but you’ll pay extra for it in interest!)

Step Five – Don’t go into the stores!

This one sounds silly, I know, but it’s so painfully obvious. If you don’t have to go into a store, then don’t! Because really, we’ve all gone into a store, we don’t grab a cart because we just need one thing, and we come up to the cashier juggling items like a clown!  

Inevitably when you go into a store, it’s straight temptation. Why do that to yourself? Stay home, and send someone else to the store, or better yet, do some online ordering for that item you need!

Or if you’re poison is the 1-click buy, then take some super easy preventative measures. Delete your credit card info on your devices! GASP! I know, I know, it sounds drastic, but making it just the teensiest bit harder on yourself to shop online could mean saving hundreds! Because honestly, sometimes I don’t get up to walk across the house to grab my credit card number!

Better yet, do a marketing edit! Unsubscribe from those pesky emails from your favorite retailers and unfollow them on social media! You won’t want what you never see! Now, I know you’ve been thinking about this idea for a while, give it a try! You can always go back later and subscribe again!

Simple hacks to stop overspending on Christmas presents

Know your prices

Do you know the regular price of the “sale” item in your hand? Even though it says it’s on sale or discounted 20% off, it might still not be a great price! If you are 100% in on saving money this holiday season, then you should scout your gifts early, record their prices, and wait to see what the “holiday deals” actually are.

Many retailers change their prices regularly. What was $59 in September could easily now be $75 in December. Yet now they can mark it being 20% off! They get to keep their sales margin high enough to get a good profit, and you (the customer) feel like you got a good deal. Winner Winner… oh wait, that’s a bull$hit dinner!

Be smarter than the retailer!

Don’t go shopping when…

  • You are hungry
  • You’re short on time
  • With somebody else (friends can be bad influences, sorry friends)
  • It’s going to be super crowded (instead go early in the morning, or late at night)

Next years plan for Christmas gifting

If you get through this Christmas and going low key on gifts wasn’t for your family, then no problem. You can have the Christmas that your family wants; you may need to start socking away money for it a bit earlier than usual! Check out How to Start a Christmas Savings Plan and How to Plan the Perfect Christmas Budget!

At the end of the day

I know that reading about how to not overspend at Christmas sounds like a bummer of a topic. But honestly, think about how you’ll feel come January when you don’t have that big fat credit card bill that’s knocking out your wallet like it’s Balboa in Rocky 1!

I know that for many of us, we remember Christmases of youth, with mountains of presents, and we want to recreate those warm fuzzy memories for our own kids. But those warm fuzzy feelings can be created out of so many instances, not just present opening. So save yourself the agony and angst of overspending at Christmas, and don’t even go there!

Christmas Budget Workbook mock up

What are your top tips for how to stop overspending on holiday gifts ?

Source: moneyforthemamas.com

5 Considerations Before Becoming a Digital Nomad in the U.S.

Where would you live if you could work from anywhere? The idea of geographic independence had remained just that for many workers — an idea — until the pandemic offered an opportunity to try it in action. Many U.S. workers found themselves working from home in 2020, which actually turned out to be “work from anywhere,” giving them a firsthand taste of digital nomadism.

Now, as more companies promise ongoing flexible remote-working opportunities in 2021 and beyond, some employees are weighing the benefits, complexities and uncertainties of giving up a permanent home for good.

Yet there’s far more to becoming a digital nomad than packing your stuff into storage. From taxes to transportation, here are five factors to keep in mind before hitting the road as a U.S.-based nomad.

1. Taxes

While domestic nomads don’t have to worry about overseas tax rules, they must still navigate the complex web of state income taxes. Since each state has its own independent rules, this can get overwhelming in a hurry.

“The general idea for freelancers is that states want to tax people based on where their butt is, doing work,” explains Adam Nubern, the founder of Nuventure CPA, which specializes in digital nomad taxation. “So if your butt is in Arizona doing work, then Arizona is more often than not going to want to tax you.”

Freelancers and others who earn self-employment income must either navigate these rules on their own or hire a professional to do so for them. And full-time employees earning W-2 income face another challenge: Pitching nomadism to their employers.

“Set expectations that your employer will not want to do this,” Nubern says. “They may have to file in each state you will be in. The complexity, especially for a small employer, can be a massive knowledge and compliance hurdle.”

For example, if you spend a tax year in six different states, your employer could be expected to file returns in each, navigating the reciprocal tax agreements between them. Some states even lack these agreements, so “they will not give a dollar-for-dollar tax credit for the amount you pay to the other state,” according to Nubern. In other words: You could get taxed twice.

2. Quality of life

Geographic independence is about much more than byzantine tax codes, of course. The big appeal of becoming a digital nomad is that it allows you to work where you want rather than live where you work. What makes for a high quality of life differs from person to person, but it’s important to start thinking about what matters most to you.

“I personally love staying in places that have great hiking and nature, right outside of the major U.S. cities,” says Julia Lipton, founder of venture capital fund Awesome People Ventures, who is approaching her four-year mark as a nomad. She cites Sausalito and Encinitas in California; Beacon, New York; and the Oregon coast as examples of beautiful locales not far from urban cores.

Consider listing several locations and scoring each across several criteria, including (based on your preferences):

  • Public transit.

  • Walkability.

  • Arts and culture.

And keep in mind that the stakes are much lower as a digital nomad. If you don’t enjoy a particular destination, you can always move on.

3. Cost of living

Geographic independence can, in theory, significantly reduce your cost of living. That’s why the “Silicon Valley exodus” has seen tech workers fleeing the expensive Bay Area for greener, more affordable pastures.

Yet for digital nomads, estimating the real cost of living requires more than simply adding up the cost in a particular area and dividing it by the time spent there. That’s because nomadism incurs additional costs, including:

  • Transportation within and between destinations.

  • Higher short-term lodging costs.

  • Higher food costs (if you eat out more).

Plus, unlike internationally traveling digital nomads who can leverage extremely low costs in other countries, U.S.-based nomads confront bigger financial hurdles.

“When I first started doing this, I was living in places like Thailand where for $500, I could live in a hut on the beach,” Lipton says. “In the U.S., especially because I like to be near my friends in expensive cities, it’s harder to make the math work.”

Cost-of-living calculators are helpful for determining the relative priciness of potential destinations (Hawaii is really expensive, as it turns out), but don’t capture the cost of moving around. One way to mitigate these costs is to move less: Stay in each destination for several months or seasons, rather than several weeks.

Another factor to consider: Some employers offer salaries based on location. So if you decide to move from the Bay Area to, say, Detroit, you could get a pay cut that offsets cost-of-living savings. Make sure you understand these policies before packing up.

4. Lodging

Whether hopping between cities or between national parks, finding good, affordable housing poses one of the biggest challenges to domestic digital nomads. There’s no one solution to solving the housing riddle, but some potential strategies include:

  • Long-term vacation rentals.

  • Traditional sublets.

  • Housesitting and swapping.

  • RV or van life.

These approaches are not mutually exclusive, and many nomads cycle among housing opportunities. Getting creative, combining strategies and thinking outside the box is the best way to avoid overpaying.

“I try to keep my monthly rent below $2,000. This means I have to be crafty and try to sublet local markets or make deals with people off of Airbnb,” Lipton says.

5. Transportation

Getting around is obviously a big part of being a nomad, and it’s worth considering different strategies for how to handle it. Indeed, the means of transportation will determine where you can reasonably go.

For example, you could fly between cities, and then either rent a car or rely on public transportation at your destination. This maximizes flexibility in terms of where and when you travel, but limits the range of potential home bases to major cities. Or, you could drive between destinations, which solves the problem of getting around once you’re there, but will be difficult if you’re traveling far or trying to park in dense urban centers.

Again, it all comes down to preference.

“I travel by plane and pick places where I don’t need a car,” Lipton says. “Exploring by foot is one of my favorite activities, so I try to optimize for that.“

If you’re looking to escape into nature, you’ll want to have a vehicle (and find a way to get reliable internet service from the road). And keep in mind that you can mix and match these strategies as you go — there’s no need to lock yourself into a particular strategy until you find what works.

The bottom line

Location flexibility has suddenly become the new normal. Untethered to a specific office or city, many are considering uprooting themselves for good and traveling the country as digital nomads. This lifestyle affords many perks, as well as some potentially unforeseen financial consequences.

It’s all about finding the right balance of high quality of life with low cost of living while juggling tax rules and transportation options. It’s a challenge to get it all right, but part of the beauty of being a nomad is that you can take chances. If something doesn’t work: Move!

How to Maximize Your Rewards

You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2021, including those best for:

Source: nerdwallet.com

Seven things college freshmen don’t need — and ten they do

This article originally appeared on NerdWalletThose ubiquitous checklists of “dorm room essentials” for college freshmen are filled with items that will be ditched by the end of first semester.

Some parents “go to the store and grab a list like they did when their kids were in elementary and high school and just go straight down the list,” says Lisa Heffernan, mother of three sons and a college-shopping veteran. Or they buy things they only wish their students will use (looking at you, cleaning products).

You can safely skip about 70% of things on those lists, estimates Asha Dornfest, the author of Parent Hacks and mother of a rising college sophomore who’s home for the summer.

What Not to Buy or Bring

Freshmen really need just two things, says Heffernan, co-founder of the blog Grown and Flown: a good mattress topper and a laptop.

Here are seven items you can skip:

  • Printer. Don’t waste desk space or, worse, store it under the bed; printers are plentiful on campus.
  • TV. Students may watch on laptops or on TVs in common areas or in someone else’s room. Bonus: Your teen gets out and meets others.
  • Speakers. Small spaces don’t require powerful speakers; earphones may be a good idea and respectful of roommates.
  • Car. Some colleges bar freshmen from having cars on campus or limit their parking. You also may save on insurance by keeping the car at home.
  • Luggage. If you bring it, you must store it. Heffernan suggests collapsible blue Ikea storage bags with zippers.
  • Toiletries to last until May. Bulk buying may save money, but you need storage space.
  • Duplicates of anything provided by the college, such as a lamp, wastebasket, desk chair or dresser.

Items left behind when students pack for the summer are telling. Luke Jones, director of housing and residence life at Boise State University, sees unopened food — a lot of ramen and candy — and stuffed animals and mirrors.

Jones says many students regret bringing high school T-shirts and memorabilia and some of their clothes (dorm closets typically are tiny).

What Can You Buy, Then?

Before you shop, find out what the college forbids (candles, space heaters, electric blankets and halogen lights are common). Have your student check with assigned roommates about appliances (who’s bringing a fridge or microwave?) and color scheme if they want to set one. Know the dimensions of the room and the size of the bed. And most of all, know your budget. Not everything has to be brand new.

Ten things — besides the all-important mattress topper and laptop — that many students consider dorm room essentials include:

  • One or two fitted sheets in the correct bed size, plus pillowcases. Heffernan says most students don’t use top sheets.
  • Comforter or duvet with washable cover.
  • Towels in a distinctive pattern or light enough for labeling with laundry marker, plus shower sandals.
  • Power cord with surge protector and USB ports.
  • Basic first aid kit.
  • Easy-to-use storage. If it’s a lot of work to get something out, your student won’t, Heffernan says.
  • Cleaning wipes. Students might not touch products that require multiple steps, but they might use wipes, according to Heffernan.
  • Reading pillow with back support for studying in bed.
  • Area rug. Floors are often hard and cold.
  • Comfort items. Dornfest says it could be a blanket or a picture of the dog — something from home that will make the space a bit more personal.

Afraid you’ll forget something important? You might, Heffernan says. But chances are, you or your student can order it online and get it delivered. Consider doing this with some items simply to avoid the hassle of bringing them yourself, and remember that “dorm necessities” often go on sale once school starts.

Do a Reality Check

If you or your student still want to replicate the rooms you’ve seen on Instagram and Pinterest, think about how the room will actually be used.

Once your son or daughter moves in, the room will never look like that again. Opt for sturdy items and be realistic. Will throw pillows make the place look more homey and inviting, or will they be tossed on the floor until parents’ weekend?

Dornfest, a co-host of the Edit Your Life podcast, offers a compelling reason not to make things too comfortable. “A freshman needs to be encouraged to get out of the dorm room,” she says. “Anything that pulls you into campus life can be good.”

She’s not advocating a monk-like environment, but rather one that encourages breaking out of routines. College should be a time to try new things and meet people from different backgrounds. Dornfest advises making the bed as comfortable as possible and keeping a few reminders of home. The ideal dorm room is more launch pad than cocoon.

More from Nerdwallet

The article 7 Things College Freshmen Don’t Need — and 10 They Do originally appeared on NerdWallet.

Source: getrichslowly.org