Saint Leo finance professor offers practical advice to help you avoid additional debt from holiday spending.

If you're a student in an online degree program with a tuition bill to pay every term, you keep a close eye on your cash flow. So you do many of the common sense things to save money on gifts and other holiday-related expenses such as:

  • Trimming your gift list

  • Making gifts

  • Using coupons

  • Watching for sales year-round

  • Saving throughout the year and earmarking those funds for holiday spending

  • Comparing prices online to find the best deals before you hit the mall

  • Planning ahead to avoid paying top dollar for last minute purchases

  • Buying in bulk and gift-wrapping creatively to make multiple low-cost gifts

  • Planning a potluck for your holiday party

  • Finding free family activities in your community

  • Stocking up on grocery items in advance – when they're on sale

  • Considering gifts that are smaller in size if they need to be mailed to cut down on shipping costs

  • Buying couples a single gift they can share instead of individual gifts

  • Purchasing gifts for next year during after-Christmas sales

Nonetheless, in the spirit of generosity, it can be so easy to lose sight of spending this time of year.

But no one wants to start the new year deeper in debt.

Saint Leo assistant professor of finance, Dr. Rick Scott, is passionate about helping people live within their financial means. He teaches Management of Finance Resources in the university's Doctor of Business Administration (DBA) program, Corporate Finance in the MBA program, as well as courses such as Principles of Investment and Personal Investment to undergraduate students.

Here are Dr. Scott's answers to some fundamental questions about how to avoid accruing additional debt during the holidays.

What's the biggest financial challenge people have during the holidays?

Dr. Scott: Trying to spend as much as they have in the past or in better times. You should adjust your planned spending according to your situation, not your history.

Is it better to use a credit or debit card?

Dr. Scott: If you have a cash-back credit card that you pay off every month, use that. If you do not have a cash-back card, get one if you qualify. They're better and more straightforward than points cards. You can find some great alternatives at

Personally, I have a Capital One 1 ½% cash back card and a Sam's Club MasterCard that gives me 5% cash back on gas purchases and 3% cash back on travel and dining purchases (1% on other purchases). I get several hundred dollars of cash back every year.

An important caveat: don't buy anything you normally wouldn't buy to get cash back. That's like eating your seed corn.

If you don't have a cash-back card and can't get one, use a debit card. This should focus you on only buying the things you can afford.

What is some advice for using a credit card wisely so you don't have huge debt come January?

Dr. Scott: Make a Christmas spending budget before you start shopping and stick to it.

Is there an advantage to paying cash for purchases?

Dr. Scott: Psychologically, using cash to pay for things makes us spend less. Swiping a card makes paying too easy. It is much easier to realize the value of those dollars as you hand them over and most of us have an instinct that makes us want to hang on to them unless we are purchasing something we really need.

The important thing is to not spend any more than you normally would.

Is layaway a good idea?

Dr. Scott: No. Wait, that's not quite correct. Hell no! If you are using layaway, that is a huge red flag that you do not have your spending under control.

What about deferred billing?

Dr. Scott: Deferred billing is only a good idea in rare circumstances. I once used 0% interest 18-month deferred billing for a major furniture purchase. I paid it off just before the 18 months was up so I truly got an interest-free loan.

The companies that offer these plans know that a significant percentage of purchasers will not pay off the entire amount in 18 months. At that point, the usual non-emphasized procedure is for the purchaser to owe a high interest rate for the entire purchase over the 18-month period. The company profits from the people that don't realize they lose big time if they don't pay off the deferred bill before the due date.

Bottom line: don't use deferred billing unless you are certain you will pay the bill before financing charges kick in.

How do you develop and stick to a budget?

Dr. Scott: Setting up a traditional budget takes some effort, but it is worthwhile to do. Use past credit card and banking statements to estimate expenses and work from there. Also, there are numerous examples available on the Internet. Look at those and make sure you do not miss any spending categories.

Personally, I use a reverse budget because it is much easier and effective than a traditional budget. In a reverse budget, you put money away for important things, and the money left over is available for fun things.

For example, insurance payments and retirement savings come out of my paycheck before I see it. I then put money in an emergency fund saving account. I then pay major bills starting with the mortgage, car payments and utilities. The money left over is for food, clothes, vacations, etc. If I find that the balance in my checking account is occasionally slipping below a limit I have defined, it is time to cut expenses somehow.

After years of doing this, my family's frugal spending habits are such that we rarely have to cut back and sometimes we accumulate enough money to make an investment or take a special vacation.

Do you have any other tips for staying in the black during the holidays? Share in the comments.

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