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?