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7 Tips for a Debt-Free Holiday Season

Nov 30, 2017 | 5 min read | Sheila Olson

Key Takeaways

  • Simple spending changes pay big dividends for your holiday fund.
  • Embrace creative, low-cost ways to get into the holiday spirit.
  • Price-checking apps and rewards points maximize your purchasing power


Here's a fun fact: Americans spent roughly $1 trillion on the Christmas holidays in 2016. And here's another: The average American spent over $800 on gifts alone, with households earning $75,000 or more spending nearly $1,300 on presents for family and friends.

Add in other holiday spending on things like parties and entertainment, decorating, and charitable giving, and it's not hard to see how many families go into debt this time of year.

In her book, Debt-Proof Your Christmas, personal finance expert Mary Hunt says that, for many people, it's easy to let the holiday spirit desensitize your usual financial cautiousness—because everyone wants an abundant family celebration. But then, unfortunately, debt remorse sets in January 1st when the credit card bills start rolling in.



The holidays don't have to be a time to upset the carefully structured budget you've stuck to all year. It is possible—and relatively pain-free, actually—to emerge from the holiday season without a pile of new debt, even if you haven't been planning for it all year long. Here are seven ways to get control of your holiday spending and stay debt-free this holiday season.


1. Develop a holiday budget and gift-giving plan—and stick to it

Decide in advance what you will spend on Christmas, and then develop and prioritize gift lists that align with your budget. Don't be afraid to make cuts to your list when necessary to fit your spending priorities. Remember, not everyone on your list needs an expensive store-bought gift; there are many who will be happy with a card and handwritten note or photo, or a gift of homemade cookies or other holiday treat. Once you've established a budget, commit to keeping it. Take the credit cards out of your wallet or purse if it helps you avoid the temptation to overspend.


2. Make pre-emptive spending cuts to fund your budget

During the weeks and months leading up to your holiday shopping, look for ways to cut your spending in small but impactful ways. Forgo pricey alcoholic drinks in favor of water or soft drinks when dining out, and put the savings in your holiday fund. Bathe the family dog at home and skip a trip to the groomer. Watch the latest new release on Netflix after the kids go to bed instead of paying a sitter for a night at the movies. Even little changes like bringing your lunch to work or skipping your weekly takeout in favor of making an economical meal at home can painlessly boost your savings.


3. Rethink your decorating plans

Even if you're the sort of person who faithfully packs away holiday decorations to reuse every year, decorating the entire house gets expensive. The average American family spends over $400 on decorations and home entertainment, a figure that can easily blow your budget. Focus on a few high-impact areas in your home: The front door and entryway, the dining room or eat-in kitchen, and the family room. Resist the urge to cover every surface and crowd every corner with the trendy decorations du jour.

If holiday entertaining is an essential part of your tradition, consider getting your neighborhood on board. An afternoon cookie swap with hot cocoa, or a progressive dinner or potluck with several neighbors, is an inexpensive way to get together with friends and celebrate the season.


4. Redeem your credit card rewards points

If you've collected a nice stash of credit card rewards points over the year by paying your balances in full each month, redeem them for gift cards to give to people on your list. A PricewaterhouseCoopers report showed that 42% of consumers like getting gift cards; what's not to like about giving a desirable gift that essentially costs you nothing?


5. Price-check everything before you buy

There are a number of free price-checking apps you can use to make sure you are getting the lowest price on everything you buy. Some merchants even let you compare competitors' advertised prices for a period of time after purchase on items you bought and then give you the difference back in cash or gift cards.

Amazon has a barcode scanning feature that lets you take a picture of an item's barcode to check the lowest available price for that item with Amazon's affiliates.

There's no reason to overpay for anything you want to buy this holiday season, and the savings you find on one or two gift purchases could give you the extra cash to buy another item on your list without going into debt.


The holidays don't have to be a time to upset the carefully structured budget you've stuck to all year. It is possible—and relatively pain-free—to emerge from the holiday season without a pile of debt.


6. It's okay to reset your kids' expectations about gifts

The "simple living" movement has been gaining steam over the past few years, and it's a trend you can definitely embrace when it comes to gifts for your children. Focus on fewer, more meaningful gifts—one personal finance blogger suggests this "formula" when shopping for your kids:

  • One thing they really want
  • One thing they really need
  • Something special for them to wear
  • Something special for them to read


7. Look for free holiday activities instead of spending a lot on entertainment

You don't need to spend hundreds of dollars on family tickets to the Nutcracker ballet to get into the holiday spirit. Most cities have free or low-cost family-friendly events like the annual Christmas tree lighting and Christmas music concerts you can enjoy without spending a penny.

Take a walk or drive through neighborhoods in your city that are known for their lavish holiday lighting displays. Spend an evening making homemade ornaments and decorations. Develop and encourage a sense of giving back by volunteering as a family at a food pantry or clothing drive for less fortunate families in your community.


What you can do next

A cash-only holiday season may sound a bit intimidating, especially if you're just starting today, but it's worth thinking twice about taking on new debt for the holidays. After all, those extra credit card payments are a sure-fire way to wreck your budget in the new year. If you don't have the money for an extravagant celebration today, why bet on having it tomorrow? With a few manageable changes, the holidays don't have to be a financially stressful time of year.


Sheila Olson is a Charlotte-based freelance writer specializing in investing, personal finance, entrepreneurship, and retirement planning. She is a regular contributor at Investopedia and writes frequently for the banking and consumer credit industry.




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