Christmas is my absolute favorite time of year. I just love everything about it – the decorations, the time with family, the food! However, Christmas can cause a lot of financial stress for many people with all of that going on. Not many people know how to have a Christmas without debt!
It is so easy to get wrapped up in the season and completely forget your budget and financial goals. Society tends to push the idea of having a perfectly decorated house, large fancy gifts, and huge family meals. NONE OF THAT is really necessary to have a fantastic holiday season!
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How to Have a Debt-Free Christmas
Here are some helpful tips that will get you prepared for the holidays and enable you to have an amazing Christmas without taking on any debt!
1. Don’t let Christmas surprise you
Guess what? Christmas is at the same time every year! The holiday season seems to sneak up every year, but there’s no reason you can’t have a plan for the holidays long before they get here.
If you don’t have the cash flow in November and December to fund all of your holiday events and gifts, then you need to start saving for Christmas ahead of time. I have a sinking fund set up just to save for the holidays. I use it to buy gifts and to pay for traveling to see family.
Christmas is not an excuse to use your emergency fund! Sit down and make your plans for the holidays before they get here so you can save up and pay cash!
2. Plan out your gift list
Planning out what gifts you need to buy for everyone before you start shopping will help you be sure you’ve saved enough. It will also keep you from going overboard.
Sit down and write out a list of every person you have to buy a gift for. Then go through and add a dollar limit to each person. You’ll easily be able to see how much you need to save for Christmas gifts and you’ll have a set amount to have in mind when shopping. When you hit that limit, that person is done!
I usually have to go one step further so I don’t forget what I’ve already bought for people. I tend to start shopping in October and can forget what I was thinking for someone by December. You can also add specific gift ideas for each person on your list so you aren’t scrambling to find something last minute. A little planning can save you time, money, and stress when it comes to your gift shopping.
3. Change your expectations
There’s no denying that Christmas has become a pretty consumerist holiday. It is so easy to get wrapped up in all the ads and fancy commercials that are constantly showing you what the holiday season “should” look like. Work on changing your expectations for the holidays so you can both enjoy the season and stick to your financial goals.
You don’t need to spend hundreds of dollars on every person on your list. Sometimes I think gift-giving has gotten out of control. Planning out what you’re getting for everyone on your list can help you avoid spending way too much. Your nephew doesn’t need 6 new toys.
My favorite thing about the holiday season is the spirit of the season. I love getting to see family I haven’t seen all year and enjoying great meals and company. Try to focus on your favorite parts of Christmas instead of stressing over the expensive parts that most people don’t even notice.
4. Leave the credit card at home
If you don’t take your credit card with you when you do your holiday shopping, then you can’t use it! If you have a strict holiday shopping budget, take out cash before you hit the stores. This will make you stick to your gift list more closely and keep track of what you have left. It will also keep you from getting sucked into all the fancy displays and going overboard on gifting!
What if you’re like me and do the majority of your shopping online? Start by deleting your credit card information from all the stores you normally use. And do this before you start your shopping. Like, do it right now. That way, you’ll be forced to actually go get a card out of your wallet. It better be that debit card!
Credit card debt is an extremely common souvenir for people to carry into the new year. Your credit card is likely the debt with the highest interest rate that you have, so by carrying a balance you’re just handing free money to the credit card company. Wouldn’t you rather keep that in your pocket this year.
5. Plan ahead for family dinners
If you are hosting one or more family gatherings you have the added cost of food and drinks for your guests. This can get very expensive very quickly.
One way to cut food costs is to ask everyone coming to bring a dish with them. This is pretty normal at the holiday parties I’ve been too and people will probably ask what they can bring. Just make sure you don’t tell everyone to bring whatever they want or you’ll end up with 6 pans of brownies and no sides for dinner.
If you don’t want to have people bring a dish with them, make a plan for exactly what you need to buy. Make a list for the store and stick to just that when you go shopping. This will keep you from buying extra things or too much food that won’t be eaten.
6. DIY your decorations
Your house absolutely does not have to look like a magazine holiday scene. To be perfectly honest, whenever I go to people’s houses that do look that way, I think about how many other things they could’ve been doing or spending their money on.
I love decorating for Christmas since it’s my favorite time of year, but there are lots of easy and DIY ways to decorate that won’t cost a ton. Pinterest is a great place to find easy and inexpensive decorating ideas!
The dollar store and Target dollar spot are great places to find inexpensive decor. Dollar Tree usually has some pretty cute seasonal items. If you get a little creative, there a ton of ways you can add some holiday cheer without spending a lot.
7. Make sure you budget for traveling
If you need to travel during the holiday season, make sure you take that into account when figuring out how much money you need to have saved. I’ve been guilty in the past of completely forgetting that I had to travel and ended up putting a ton of gas on my credit card.
Also, figure out the most economical travel options. You don’t need to fly first class and pay for a bunch of add ons. Can you find an airline without bag fees? Would it be better to drive? Whenever I travel I drive (my family is 7 hours away), so I always factor in gas expense. But remember that you might want a snack or drink and add that into your travel budget.
Traveling can make you tired pretty quickly, especially if you’re at the airport for a while. Consider having cash set aside for snacks and drinks so you don’t go overboard just because your tired and hungry.
Last Christmas was the first time I had a sinking fund saved up for gifts and travel. While I still went a little overboard and over budget (on my credit card), it still helped to know that a lot of my gifts were paid for in cash. The entire holiday didn’t end up following me throughout this year.
The holiday season is pretty overwhelming even before you consider the financial strain it can cause. Christmas shouldn’t be a cause of financial stress or new debt! Get started preparing for the holidays today, so you can enjoy next Christmas without debt!
Read more:
- The Basics of Sinking Funds
- 9 Powerful Steps to Reduce Financial Stress
- 15 Financial Habits to Be Wealthy
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