American students are carrying over $1 Trillion in education debt,  but that doesn’t mean they have to pinch pennies like Ebenezer Scrooge during the holidays.

The Wall Street Journal offers some savvy spending tips so the season can be merry for economically challenged young graduates.

For recent grads, all of that Christmas shopping can add up—not to mention holiday get-togethers and after-Christmas sales still to come. Take Cameron Johnson of Birmingham, Ala., wanted to buy holiday gifts for his family. So the 22-year-old bank analyst set aside about $450 in October to cover his parents, grandparents, brothers, uncle and nephew.

To do so, Mr. Johnson, who recently started paying back his $26,000 in student loans—to the tune of $287 a month—after graduating from Auburn University in May, had to make some financial compromises.

“I really cut back spending on myself” over the past three months, he says, socking away cash he would otherwise spend on entertainment and clothing.

For recent graduates saddled with student-loan and/or credit-card debt, navigating the holidays can be tricky. But there are steps you can take to keep your debt in check and start the new year on the right financial foot.

First, take stock of what you owe, and understand the difference between “good” and “bad” debt, says Alexa von Tobel, founder of financial-planning site LearnVest.com and author of “Financially Fearless.”

While one “would prefer to have no debt,” Ms. von Tobel says, good debt is related to investments that hopefully will grow in value over time—like a home or a college education.

…Do your homework to ensure you’re getting the most favorable interest rate available, Ms. von Tobel adds. You might be eligible for loan consolidation or an alternative student-loan payment plan, for example.

You might call your credit-card company to see if you can negotiate a lower interest rate, or perhaps a different credit-card company would be willing to roll over your debt at a lower rate. Just be sure to read the fine print on any new loan contracts or credit cards, Ms. von Tobel says.

Be honest with yourself about how much you can spare for holiday gifts, Ms. von Tobel says. Make a list—of your anticipated expenses, that is—and check it twice, says Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial in Minneapolis.

Include regular monthly expenses, such as loan and/or credit-card payments, in addition to projected (or recent) holiday spending, Ms. de Baca says. It’s essential to make at least minimum payments on each loan or credit card, Ms. von Tobel says.


 
 0 
 
 0