How To Avoid Last-Minute Holiday Spending And Start The New Year Debt-Free

Are you feeling the holiday pressure?

With so many activities going on, it's easy to feel like you have to spend money. On top of that, a lot of that spending ends up being unexpected.

According to ABC News, credit counseling agencies see a 25 percent increase in people looking for help in January and February. Many of those folks are prompted to look for help getting rid of holiday debt.

In fact, a Student Loan Hero holiday survey found that 55 percent of shoppers using credit cards expect to add more than $500 to their balances as a result of holiday spending.

Why?

We have gift lists. We want to make the holidays fun for our friends and family. We end up booking our travel at the last minute, so we find ourselves paying premiums for airfare.

Procrastination means we have to pay for rush shipping. From decorations to party food, to tips for the hairdresser and delivery person, there's a whole list of things we're “supposed” to spend money on.

Between the procrastination and things we forget about, it's easy to panic and throw away money unnecessarily.

Before you know it, you find yourself in debt and carrying your holiday bills well into the new year.

Holiday debt and your long-term finances

Unfortunately, your holiday debt isn't just impacting you today and tomorrow. It can have long-ranging impacts on your finances.

High-interest credit card debt means you end up sending extra money to creditors, rather than using it to further your own financial freedom.

You wind up paying off holiday credit card bills instead of getting rid of other debt or investing. That's money you can't put to work for you.

You can also get caught in a vicious cycle of charging debt to your credit card, paying it off during the first part of the year, spending the rest of the year trying to catch up and then getting back into debt the next holiday season.

Not fun, right?

If you'd like to start 2017 with a clean slate, here's how to avoid last-minute holiday spending and break the cycle of debt.

1. Take a "timeout."

Part of the issue is that you're in a rush and not thinking about whether or not you really need to make that purchase.

Take a deep breath. Put the item back. Really think about whether you need it.

Do you have another outfit that will work just as well for the party? Does a passing acquaintance really need a gift from you?

When you take a moment to be mindful of your purchases, there's a good chance you'll change your mind. That can save you money right there.

2. Use holiday rewards cards to your advantage.

While you don't want to overspend on credit cards, it is possible to make the whole situation more advantageous when you're careful. Use rewards cards to your advantage.

Look for cards that come with a 0 percent APR promotion so you aren't paying interest. Have a plan to pay off the card before the regular interest rate kicks in 12 or 18 months down the road.

If you're going to go this route, it's crucial you only spend what you planned originally.

Reward points won't do you any good if you spend more than you can afford to pay back by the next billing date.

3. Learn how to say "no."

Remember, you don't have to attend every holiday party. Don't let FOMO hold you back from making a smarter financial decision.

Prioritize your social schedule during the holiday season and pick a couple of events you don't need to attend.

Just think about it: Skipping one party can save money on that white elephant gift, a new outfit, a dish for the potluck and maybe even a hangover, too.

4. Start a gift-giving pool.

According to Gallup, the average person is planning to spend over $700 on Christmas gifts this year. If you have a big family or large circle of friends, consider proposing a money-saving alternative.

For instance, collect names and take turns drawing them out of a hat so that each person only buys for one. You can also do a Secret Santa or a white elephant exchange so that you aren't trying to get gifts for everyone.

You can also work with your friends and family to come with a budget-friendly limit on the amounts spent on gifts (and they'll probably be grateful that you did).

Finally, you can avoid gifts altogether and do a service project together. This is a great way to create memories without spending an arm and a leg on gifts.

What if it's too late?

Of course, things don't always go according to plan. Come January, you want to get rid of any debt as quickly as possible.

Here are some steps you can take to pay down your debt faster so you can focus on your big financial goals:

A 0 percent APR balance transfer: It's much easier to pay down your debt when you aren't paying a high interest rate, too.

You can find some pretty good 0 percent APR balance transfer deals at the beginning of the year. Once you do, transfer your balance and then work to pay it off before the introductory period is over.

Take a no-spend challenge: Going cold turkey from spending can help reset your habits and save a little extra in January.

See if you can go a full week without spending money on anything (except bills that need to be paid, of course).

Finally, use those cans in the back of the pantry and learn how to entertain yourself for free. It'll be fun, promise.

Start a side hustle: If you're really serious about demolishing your debt, get a side hustle or second job.

Turn your skills into a stream of side income, whether it's writing, web design, driving for Uber or even donating blood plasma. Use that money to make extra payments on your balance.

Use your tax refund: If you know you're getting a tax refund, use it to eliminate your debt. That goes for any year-end bonus or profit-sharing you receive from your employer, too.

It's tempting to splurge when faced with a big chunk of change, but you'll thank yourself for putting it toward your debt instead.

Seek professional help: Finally, if you feel like you're in over your head, there's no shame in asking for help. The Justice Department offers a list of approved credit counseling agencies that can assist you in getting on the right track.

Once you get through this year's holiday spending spree, it's time to figure out how to avoid this problem in the future.

In the end, it's about taking the time to plan ahead and save money throughout the year.

If you do, not only will you be able to spend as you please during the holidays, but you also might actually have the time to enjoy them.