Avoid overspending this holiday season

Overspending during the holiday shopping season can lead to financial hardship come January.

Financial planner Paul Oster says that he is in favor of using gift cards to shop for loved ones for the holidays.

“Once you pick a budget for the people you’re going to shop for, buy a gift card to use and once that gift card is done, you’re done shopping for that person or group,” he says.

Oster says that other ways to avoid overspending during the season include putting money aside in advance and using cash or debit cards. Studies show that consumer spend less than using cash than with credit cards.

He also suggests considering a gift exchange instead of buying a gift for everyone.

“If you’re shopping for a group that’s more than two or three people, I would suggest doing some sort of Secret Santa model. You don’t have to buy gifts for everyone in the group, because everyone feels the same way you do.”

Oster also says that “regifting” is OK as long as it is a nice gift and you don’t give it back to the person who gave it to you.

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Paying off holiday shopping debts

With the holiday season over, many New Jersey residents are starting 2018 with more debt than they bargained for.

A survey finds that shoppers charged about 5 percent more this holiday season than previous years. More than half of those surveyed say that they will still be paying off the bills by the spring.

But consumer experts say that there are some ways to cut down the post-holiday financial troubles.

Certified financial planner Paul Oster says that consumers should come up with a debt consolidation plan to pay off their debts.

“You should focus on one credit card at a time, the one with the highest interest rate,” he says. “It’s called debt stacking. Mathematically proven.”

But what if you have a lot of credit cards, and just making the minimum payment is hard?

Experts recommend an approach called “pyramiding.” Consumers should pay off the card with the smallest balance first; this will free up some money, which can then bus used to pay off cards with a bigger balance. Consumers should keep doing this until all the debt is paid.

Oster cautions consumers against looking for a quick fix to pay off debts. He says that they should avoid using companies that offer to settle debt for less than is owed.

“You would actually have to let your cards go into default. They would settle with them for 4- to 50 cents on the dollar. But think about the effect that will have on your credit score.”

The average New Jersey family has more than $8,000 in credit card debt, according to the federal government. It would take 10 years to pay off that balance if only minimum payments are made.

Need Help?

If you still need help with controlling your debt and/or improving your credit, fill out the form below and get a free credit consultation from a credit expert at Better Qualified.