Suze Orman Says You Must Stick to This Rule When Buying Holiday Gifts

It could spare you a world of financial regret.

Now that we're getting into the holiday season, a lot of people are no doubt focused on checking items off their gift lists and doing their best to shower their loved ones with presents they know they'll enjoy. If you tend to go all out during the holidays, you're in good company. And you probably have the best of intentions.

But the problem with buying holiday gifts is that too many purchases, or too many expensive ones, could lead you into debt. And so it's important to follow Suze Orman's advice if you want to close out the holiday season debt-free.

A simple rule worth following

When it comes to making holiday purchases, you generally have options. You could hand over a pile of cash, swipe a credit card, or sign up for a "buy now, pay later" plan (BNPL plan). These plans have grown increasingly popular in recent years, and they allow you to pay off purchases in installments rather than having to pay for them at once. And unlike credit cards, BNPL plans don't charge interest if you make your payments on time and stick to your payment schedule.

But Orman insists that your best bet when making holiday gift purchases is to stick to this advice on her blog: "If you want to purchase a gift, it must be something you can afford to pay for right at the point of purchase. No BNPL. And no letting your credit card balance roll over unpaid into the next month."

She makes a really good point. The problem with BNPL plans is you might think you'll be able to keep up with your installment payments, only to fall behind. Once that happens, you run the risk of accruing interest and penalties on your purchases, not to mention damaging your credit score, the same you would by being late with credit card payments.

And speaking of credit cards, you might think it's okay to accrue a small balance in the course of buying holiday gifts because you should, in theory, have it paid off quickly. But what if something happens that prevents you from doing that?

What if you end up having to miss a few weeks of work due to illness and lose out on a paycheck? You could end up accumulating a lot more interest than expected. And you might also damage your credit score -- either by being late with your minimum payments, or by racking up too high a credit card balance relative to your total spending limit.

That's why sticking to Orman's advice makes sense. It's nice to want to buy gifts for the important people in your life. But taking on any form of debt isn't being nice to yourself. And it's really okay to put your own financial well-being first in this situation.

Don't start off the new year in debt

Closing out the holiday season with a pile of debt could add needless stress to your plate. And you don't deserve that. So the next time you find yourself contemplating a gift purchase, ask yourself whether you can pay for it outright. And if the answer is no, move on or find a less expensive item to show an important person in your life you care about them.