Christmas is a whirlwind of joyful activity. But, it can also be a source of stress if you are going into debt to enjoy the Yuletide season with family and friends. According to a survey by Magnify Money, the average American family began 2018 with just over $1000 in Christmas debt. Not only that, 24% of millennials will still be paying off this debt twelve months later! This amount is then added onto the average $17,000 of credit card debt of every American household.
Every year we are going just a little further into debt just to ring in the holidays with others. This is sad news, folks.
Christmas should never take you by surprise. It doesn’t move around, like Easter does! It occurs on the 25th of December every single year. So, let’s take the bull by the horns and pay cash for Christmas!
The good news is, holiday debt is completely unnecessary!
You do not have to be a statistic! You can pay CASH for Christmas and I’m going to tell you exactly how to do it!
Step 1: Get Accountable!
That’s right! You need an accountability partner before you purchase even one gift! DON’T DO CHRISTMAS ALONE! If you have a habit of going into debt to celebrate the holidays, don’t assume that you can do it by yourself! Bad habits are hard to break.
I will tell you with absolute transparency that the opinions of others have always mattered very much to me. I love to make people happy and nothing breaks my spirit more than knowing that I have disappointed a friend or family member. At Christmas, I spent out of guilt, feeling that no matter what I gave them, it would never measure up to their expectations.
When I married, my husband and I had to get on the same page about financial obligations, Christmas being no exception. If you have read my story, then you know that the concept of a budget had never even crossed our minds. Our first Christmas we followed our “familial patterns”: sending Christmas cards to every relative (both far and near), participating in the “family name draw”, and spending more money than we ever should have.
Lack of clear communication is one of the main problems, which contributes to Christmas debt. I’ve seen it happen. Neither partner knows who is taking care of the gift-buying, how much is being spent, or even has a complete list of everyone who will receive a gift! So, one or both of the partners winds up running out at the last minute to spend “whatever is necessary.”
If you are not married, I highly recommend that you get an accountability partner. This person should be trustworthy and willing to be firm, but honest with you.
Talk openly and honestly with your spouse or accountability partner.
Here are some items to consider:
- Do your relatives expect a gift of a certain value?
- Do you buy gifts for siblings, their spouses, and all your nieces and nephews?
- Do all your siblings contribute equally to a gift for your parents?
- Does everyone in the office pitch in a certain amount for management gifts?
- How much money do you have (or can you) set aside for Christmas expenses?
- How much money should you spend on Christmas expenses?
This step also includes honest reflection on:
- how to deal with the holiday expectations of others.
- how to say “no” kindly and respectfully
- how to be proud of giving simple, thoughtful gifts
NOTE: If you struggle in this area, I really, really want you to read, “Four Strategies for Making the Holidays Memorable Without Breaking the Bank” . It is based very much on my own experiences. Believe me when I tell you that I understand the anxiety of conflating your self-worth with your ability to please others. You should never spend money that you don’t have to impress others or gain their love and respect.
Step 2: Make a gift and recipient list
Here are the “nuts and bolts” of creating your Christmas gift list.
- It is best to make a gift list early in the year. But, if you are reading this and it is nearly December, then just make the list now.
- I like to make a notation next to each name of possible gifts and how much I can expect to pay for each gift. This makes Step #3: “Set a Realistic Budget” much easier.
- In order to live within a tight budget, you’ll want to look for gifts at bargain prices throughout the year. So, you’ll need to have your game plan in place and be ready to go!
- If it is December and you are just getting started, then don’t “wing it”. That will spell certain disaster and a holiday hangover in January! Make that list and stick to it!
- If you think there is a possibility that you have missed a name or two, wrap a couple of extra “under $5” generic gifts and keep them handy, just in case I have neglected to remember anyone. I do this every year and it works out perfectly.
Step 3: Set a Realistic Budget.
Do NOT spend money you do not have to try to impress or earn the respect or love of others!!
We budget for Christmas a full year in advance. By the first week of January 2019, I had my entire 2019 Christmas budget all saved up and ready to spend. Where did this money come from? I saved it, a month at a time, during 2018! I do it this is way, because I buy Christmas gifts year-round. So, I need to actually work an entire year ahead.
What if you have not saved any money for Christmas?
If much of the year is already in the rearview mirror, then you have a few options:
1. Reduce your Christmas budget to the amount of money you have on-hand and can comfortably take from your other budget categories. No matter what, you can’t go over 100% of your income. Don’t borrow from Peter to pay Paul. It’s takes too much effort and time to pay Peter back.
2. Reduce the number of people on your list. When we were raising our children on a very low budget, we had to do this. After having a couple of children, we contacted all of Larry’s family members and told them that we were opting out of the family gift exchange. We simply did not have the money. It wasn’t necessarily popular. But, we were determined to live within our means!
3. Make and give DIY gifts. I have done this a lot! If you read through my suggested posts at the end, you’ll find lists of all the DIY items that I have made and given as gifts through the years. It’s actually pretty fun!
You can Google and get a lot of ideas! I did soup mixes in quart jars one year and added some homemade hot cocoa and quick breads. I arranged all the items in pretty containers that I had bought in late January for 90% off at Big Lots. Score! Friends and neighbors loved them!
4. Work side jobs for a short time
Nearly all businesses are hiring part-time, short-term help for the holidays. If you need extra cash, this may be just the ticket for you. Generally hours are flexible and, who knows, you may find that you like it and the company may offer you a permanent gig after the holidays are over.
5. Sell possessions to earn holiday money. Although not considered a “fun” option, it beats going into debt. You could sell some of those handmade or home-baked items to get cash for your Christmas! Since it’s Christmas, people are in the “buying mood”. Some of the items you don’t use (some of which are still in the original packaging!) can be sold on free venues like Facebook Marketplace.
My husband is a very successful Marketplace seller! Learn his 12 hints for a successful sale in our YouTube video.
Step 4: Shop Wisely!
Shop year-round (or at least don’t wait until the last minute.)
Shop used. Thrift stores, used bookstores, rummage sales, and consignment shops are all treasure-troves for your budget-minded Christmas!
“K.I.S.S.” – Keep It Super Simple! You shouldn’t have to break the bank or break your neck to express love to family and friends.
Pay with actual, physical cash! Statistically, when you spend cash (as opposed to using even a debit card), you spend nearly 20% less! Keep your cash in an envelope marked “Christmas” and then use this money when you purchase anything for Christmas. This is the easiest way to keep track of how much you have spent and how much you have left in your budget.