The end-of-the-year holidays are among the most significant spending times for most of us. Retailers expect October through December to bring in their highest profit margins. Without a bit of holiday planning, we will end up in debt like everyone else.
As Consumers, we get caught up in the holidays, swipe, swipe, swipe our credit cards, and hope for the best in the coming year. Maybe we will even get it paid off this year. If we fail to do some holiday planning, we will be like everyone else and end Christmas with tons of debt on our credit cards.
Holiday spending is one way we continually dig ourselves deeper into our hole of credit card debt.
How can we begin to shift how we do things? Here are 11 easy holiday planning steps to have a debt-free Christmas.
Take a stand against spending with credit
The first step is committing to yourself not to buy anything unless you have the cash to pay for it. A credit card with available credit is NOT having the money for something!
If this has been a problem for you in the past, I challenge you to put the credit cards away. Clear the credit card information from your Google Chrome or Apple Wallet and commit to only using your debit cards and cash this holiday season.
If you are self-disciplined with your credit cards, by all means, use them to your benefit. Be sure you are using them to win the game of credit card rewards by the end of the shopping season.
If you charge your spending on your credit cards and don’t pay it off for months or even years, those purchases can cost you hundreds of dollars in interest.
The better you plan ahead to use cash instead of credit, the more money you will save.
Set your Christmas shopping budget before you shop
Someone wise with their money realizes at the beginning of the year that Christmas will come! She sets aside monthly money in her reserve savings account to pay for the holidays and other expenses she expects but is not regular throughout the year.
This wise spender will have an amount already set before October 1, determined by their savings throughout the year. She will then use that amount and create an appropriate spending plan to meet her holiday needs, sticking to the amount she has to spend.
If you were not wise about money at the beginning of the year, you could always start next year this way! However, what do you do this year? My dear friends, this does not give you an excuse to use your credit cards just because you didn’t plan and save ahead! This year may be a little tighter and slimmer on the gifts and decorations so that you can get back on track. It will take willpower and determination, but you can do it!
If you have not saved ahead, you must check how much money you can set aside from your paychecks until Christmas. This amount of money will be the amount you have to spend. If you can cut costs in your general spending, this will help you have more by Christmas to spend on gifts, decorations, travel, and hosting parties. Going over your past spending and cutting costs in the future will help as you move into the new year and plan to save ahead for Christmas next year.
Clean out and sell the old to help pay for the new
I always make my kids go through their toys before birthdays and in the fall for Christmas. Cleaning out makes room for the toys they will receive, and then I can resell some of the old to make extra money to put toward their new presents.
Some places to resell the kids’ clothes and toys are Facebook Marketplace, garage sales, your friends on Facebook, your neighbors on Nextdoor, or kid’s consignment sales or resale shops. Even if you only get a few dollars, it has helped you declutter, and that is a few dollars more for your Christmas budget!
Create a Holiday Spending Plan
Make a list of all the expenses you will have this holiday season.
Set a limit for each area of spending. If you can find one of the items or meet one place without using your allocated amount, you can shift the extra to another category. However, don’t go over your total limit.
Don’t forget to include the following in your plan:
- Halloween Costumes, Candy, Parties
- Food for entertaining or gifts and extra items for special food prep
- Travel to see family and friends
- Unique clothes for parties, pictures, or holiday spirit
- Workplace expenses (gifts or parties)
- Charitable Giving
- Christmas Shopping Budget
Set expectations early with family and friends
If you are reducing what you have done in past years to keep Christmas off your credit cards, then be sure to communicate with your family and friends early so there will not be hurt feelings.
Maybe they will surprise you and jump right on board with cutting costs and making it a fun and meaningful holiday for all without the stress of added expenses.
Get creative with how you limit spending on gifts. Here are some ideas to get you started:
- Draw names among family and friends to each give and receive one gift instead of having to give to everyone.
- Plan a family event or experience together rather than buying each other gifts.
- Exchange a special gift with the intent it can be regifted. For example, each person or family can choose a fun game to rewrap and pass on from year to year. The family recipient can enjoy family game nights all year with the one they get, maybe even adding tips, tricks, and ideas to make the game or game night better when they pass it on next year.
- Agree to a silly or unique gift-giving theme instead of an expensive gift exchange, such as a White Elephant, something you found at a thrift store, the most unique mug, ornament, etc.
- Give only homemade gifts.
- Set a low-cost limit for each person. Finding the best gifts someone will love with a $5, $10, or $20 limit challenge.
Start a new family tradition with your kids.
Instead of buying them tons of gifts as you may have in the past. Limit what they will get to a list such as:
One you Want, One you Need, One you Can Wear, One you Can Read.
The idea is to get each child (or family member) only four gifts, one for each category.
This four-item list was adopted by many families to cut costs. Some added or adapted with some of the following:
One you can Do. (a class or activity) One to Create. (an art kit or project-based gift) One that’s Sentimental. One we will Share. (a game or an outing)
Create your family’s list for each child using some of these or ones you make up yourself. Let the kids know beforehand so they know what to expect under the Christmas tree.
I did this last year. I went from giving many gifts to limiting what was under the Christmas tree. My kids knew beforehand, and it didn’t bother them a bit. It was more fun because they could enjoy what they had rather than be overwhelmed with too much at once.
Create and carry a gift list.
List the people you will shop for, the spending limits or guidelines for the gifts needed, and add some ideas of what to get and then carry it.
I keep this list in mind all year long! I check clearance racks and deals for gift possibilities for my recipients. Even if I get it in July, I will hide it in my gift closet until Christmas. Planning helps me get the best deals for all the gifts I wish to give.
My small budget doesn’t seem so small when I watch for big-ticket items at 75-80% off. I rarely purchase a gift that is not 50% off or more!
During the holiday season, I watch the sales and deals, checking my list often to find the cheapest way of buying for everyone on my list. I will watch for lower-cost alternatives to my ideas and grab what works best.
Cross them off as you go, and don’t wait till the last minute when you have less time to compare shops, especially for more oversized ticket items.
Take advantage of free events in the community.
Check the community calendars early and plot out some of the tree lighting ceremonies, the light parades, the Winter Wonderlands, live Nativities, maps of home light tours to follow, etc., that are free for you and your family to attend.
We try to attend 2 to 3 of these throughout the holidays to limit the entertainment that costs us while creating memories and family fun regardless of cost.
Use layaway to spread out the payment without adding an interest charge
Several stores will still allow you to pay through layaway. It can help you pay over time without the added interest on a credit card.
Explore if layaway is a good option for any of the gifts you plan to purchase.
Encourage gratitude through service.
Plan a time for your family to serve during, before, and after the holiday season. Giving our time and helping others encourages us all to remember just how fortunate we are during the holiday season.
My kids and I like to prepare shoeboxes for Operation Christmas Child. They are amazed that some kids only get this small box for Christmas and may not get any other gifts throughout the year. We love to track our shoeboxes to see what communities they go to and read about the kids that live there.
Preparing, sending, and following these boxes, sure helps my kids understand how blessed they are even if the gifts under the tree look sparser than they have in past years.
Stick to your budget and enjoy a debt-free Christmas!
After all this planning, stick to your plan.
Don’t give in to temptation for a deal you feel you can’t pass up, especially with all the sales and marketing. Don’t get sucked in and pay for any of those deals with your credit card unless you have the money in the bank to pay it off!
Following your plan will ease any financial tensions and allow you to enjoy more of the holidays and the beginning of the year stress-free.