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Two Ways To Avoid Holiday Debt


If you’re like most people, the holidays signify a challenging time for your finances. It’s all too easy to be swept up by the most wonderful time of the year, as you spoil the people on your list with presents and good food. Each year, you spend far more than you ever intend, and each year, you’re stuck ringing in the New Year with debt. Many believe this is the only way to celebrate the season, otherwise you risk being a Scrooge to the people around you, but that’s simply just not true. You can keep your Christmas bill low without neglecting your loved ones and here are the tricks that can help you do just that.

Use a budget

You may have successfully improvised your finances at any other time of the year, but the holidays introduce a lot of unusual expenses that put added pressure on your cash. According to the National Retail Federation’s survey, the average American spends roughly $967 on holidays. That’s nearly an additional grand on top of your regular expenses, plus any surprise emergencies that come your way this winter.

You have no understanding of your financial limitations when you shop without a budget because you haven’t figured out how much you can realistically spend on Christmas, nor have you tracked how much you spent on them already. Meanwhile, the credit cards in your wallet can fool you into thinking you have more money than you do when your cash runs dry. Once you start charging presents and other holiday necessities, you could be putting your financial success in jeopardy. Stuck with holiday debt, you may not be able to cover additional winter costs, like fixing a frozen pipe or repairing your furnace.

A budget is a simple solution to overspending. It outlines how much you can spend on the holidays before relying on credit. It also tallies your expenses, so you’re never at a loss for how much you’ve spent in comparison to that limit. If you’re hazy about how to start a budget, don’t worry. There are tons of resources available online that can help you spend within your limit, so you don’t fall behind with surprise expenses in the New Year. Don’t settle for one step-by-step guide to budgeting. Take a couple of evenings to look up different methods to get a better picture of the task ahead, and you’ll find the best strategy for your capabilities.

Make a list

A list is an important Christmas tool that even Santa uses, so never leave your house without one. It, like a budget, keeps you focused, so you don’t get side-tracked by things you don’t need — like those dreaded impulse items stationed near the cash registers. Though one last-minute addition to your bill doesn’t seem like much, their true impact lies in their combined total from every transaction. If you stray from your list to consistently pick up more than you need, you’ll blow your budget.

To create the most effective list, pair it with your budget. Jot down how much you can spend on each person, task, or activity on your list. The dollar point next to each list item is a great visual reminder in the mall that you have a limit on your spending.

If that limit is especially low, it may take some time to find gifts that come in under its assigned value. Part of the success of your list is drafting it early on enough in the holidays, so you can brainstorm presents and retailers that help you hit your target. Even with this preparation, it may be more cost-effective to make your gifts, so don’t forget to look up homemade gifts that will impress your loved ones without breaking the bank.

In the end, don’t stop at the holidays

A budget and a list make a distinctive pair during the holidays, but don’t pack them up with the Christmas decorations after the Near Year. They give fundamental structure to your spending at any time of the year, whether it’s the slow month of March when you have nothing planned or a busy July with an extravagant holiday scheduled. Together, they can help you stay on top of regular expenses, plan for future ones, and recover from unexpected purchases, so make it a habit to use both throughout the holidays and beyond.

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