Grab a calculator and start adding up that dreaded pile of holiday receipts - gifts, party outfits, dinners, etc. How did you manage to pay for it all?


According to Scotiabank's 2010 Holiday Spending Study conducted by Harris/Decima, Canadians spent $968 on overall holiday spending in 2010, up from $891 in 2009. Of those surveyed, 49 per cent of Canadians reported they’d saved up in advance for all expenses. Of the remaining, 31 per cent had some savings and rest financed all their holiday cheer with credit cards.


Let’s say you charged $968 on your credit card at 18 per cent interest throughout the holidays. If you only made minimum monthly payments, two per cent of the balance owing, it would take 145 months and $1,300 in interest charges to pay it off. If instead you pay $50 a month, it would take you 24 months and cost $184 in interest. In both scenarios, lingering holiday credit card bills can haunt you for years.


The best way to deal with holiday debt is to avoid it in the first place by saving in advance and paying cash. Think about gifts for next year starting now. Space out your spending to take advantage of deals throughout the year like Boxing Day or end-of-season sales, thus avoiding the high priced, high stress December holiday madhouse at the malls, big box stores and retail outlets.


The second best way is to pay off ridiculously high interest credit and store card bills as quickly as possible. Cut back on day to day luxuries like cookies or beer and empty out your change drawer so you can scrounge up an extra $20. Make extra payments as often as you can and don’t rack up any more debt.

Don’t let holiday debt get in the way of planning a fun and frugal New Year.