10 Tips for Avoiding Holiday Debt by Belle Wong, J.D.

10 Tips for Avoiding Holiday Debt

Don’t want to sink into holiday debt this year? Check out these ten tips for getting through the holiday spending season without breaking your holiday budget.

by Belle Wong, J.D.
updated December 02, 2014 · 6 min read

It’s that time of the year again: gifts, parties, feasts and fun galore! Yes, the holiday season most certainly can be the most wonderful time of the year—provided, that is, you don’t end up welcoming in the new year with a fresh, new load of holiday debt.
Nobody wants to be a Scrooge at this time of the year, but being careful with your holiday spending doesn’t mean you have to be Scrooge-like. And not only will a little extra care and planning help you to avoid holiday debt, you’re more likely to be less stressed out about the holidays if you don’t overspend. How should you avoid debt this holiday season? The following ten tips on saving money and spending wisely can help you keep the holidays within your budget.

1. Put Together a Holiday Budget

Yes, the dreaded “B” word. If you’re like a lot of people who wince at the thought of budgeting, it might help to think of this as simply your personal spending plan for the holidays. Having one will help you keep track of how much money you can afford to spend, as well as how much money you actually do end up spending. Staying aware of your finances during the holidays is truly half the battle.

So before you even think about hitting any online shopping sites or heading out to the mall this year, take some time to decide how much money you want to spend on the holidays (including how much you should be setting aside from each paycheck). Then list all of your upcoming holiday expenses, and as the holiday shopping season progresses, keep track of how much you’re spending and on what.

2. It’s Not Just About the Gifts

When people think about their holiday spending, they often think mainly about the gifts they want to buy for their friends and family. But at this time of the year, there are many other holiday expenses that may not automatically come to mind. These “extras”—which aren’t really extras at all—include things like holiday decorations, entertainment and food, and travel costs. Make sure you keep these extras in mind when you calculate how much you’ll have to spend.

3. Make a Gift List

The gift list has the power to transform your holiday spending. And as a bonus, the time you spend working on your gift list will help you choose gifts for your family and friends that you know they will love and enjoy. The best way to put together a great gift list to which you can commit? Plan ahead and make your list before you do any shopping at all. Take into account every one’s personal preferences, and spend a bit of time researching possible gifts online.

Another tip? Make it easier on yourself—and your wallet—and include a couple of alternate gifts for each person, just in case you run into the “out of stock” problem. With these alternates on your list, you won’t be as tempted to pay more money than you’d budgeted on something that may not even be that well-suited to the person you’re buying for.

4. Keep a Holiday Savings Account Open Year-Round

One of the best ways to stay out of credit card debt over the holidays is to set money aside to buy gifts and pay for all the other holiday expenses that inevitably crop up. Consider opening a holiday savings account that you’ll continue to use even after the holidays—arrange to have a set amount transferred every week or month into this account year-round, and you’ll be laughing when the holiday season rolls around each year.

Another way to add more money to your holiday savings account? Occasionally set yourself “challenges,” such as a week without your regular morning Starbucks coffee. Instead, put the money you would have spent that week into your holiday savings account. These self-challenges, sprinkled judiciously throughout the year, can even make saving money fun!

5. If You Plan to Use a Credit Card, Choose One That Gives the Best Rewards

The main thing about using a credit card for the holidays, of course, is to charge only what you know you’ll be able to pay off the following month. If you keep this in mind, using a credit card doesn’t have to be disastrous. If you do plan on charging some of your holiday shopping, go through your credit cards and see which ones offer you the best rewards.

For example, many cards offer cash-back amounts if you make purchases at particular retailers. If these retailers happen to be ones you plan to shop at anyway, then it makes sense to use that credit card when shopping there and rack up those rewards while at the same time crossing things off your gift list. Some cards also have special offers specifically for the holiday shopping season, so make sure you check out such offers as well.

6. Shop Online

Before you head out to the mall, you may be able to save money by checking prices online first. When you shop online, you can easily comparison shop for the best prices, something you’re far less likely to do when visiting physical stores. Many online retailers also offer web-only discounts which can free up a bit more money for other items on your gift list.

7. Shop Early

When you shop early, both online and offline, you’ll get the best selection and minimize the chances that something on your list will be out of stock. Finding out an item is out of stock, especially late in the holiday shopping season, can sometimes bring on the kind of desperation that prompts you to buy something much too expensive and not listed on any of your lists. And if you’re planning on shopping online, placing your orders earlier means you won’t end up having to pay extra money for expedited shipping to make sure your items arrive in time for the holidays.

8. Avoid the Impulse Buy

Impulse buys are the big “no-nos” of holiday shopping. Even indulging in the occasional impulse purchase can send your holiday budget completely off track. You’ve made a gift list, right? Make the commitment to stick to your list, and avoid buying anything that’s not on it. And remember, impulse buys include shopping for yourself: if you see something you’d really, really like, make a note of it for the next person who asks you what you’d like for the holidays. And if no one ends up gifting it to you, remember, you have all of next year to go out and buy it for yourself.

9. Keep an Eye Out for Sales and Discounts

Now’s the time to sign up for your favorite retailers’ email newsletters. You can always unsubscribe once the holiday season is over. If email isn’t your thing, consider following retailers on Twitter or on Facebook. During this time of the year, many retailers offer special discounts or sale items through social media and reward newsletter subscribers with cost-saving offers. And before you toss all your junk mail into the recycling box? Check for sales flyers and holiday deals from stores you like to frequent.

10. Wrap as You Go

Don’t wait until a few days before the holidays to wrap your gifts. Spend some time every few days wrapping up the gifts you’ve just purchased. Not only will you enjoy the gift wrapping process more, you’ll also be less likely to purchase additional, impulse items for your gift recipients that weren’t on your original gift list.

Holiday spending doesn’t have to overwhelm your bank account and put you into credit card debt. Keep your holidays financially stress-free, and free up your energies to have the happy, meaningful holidays you deserve.

Get legal help with financial matters GET STARTED
Belle Wong, J.D.

About the Author

Belle Wong, J.D.

Belle Wong, J.D., is a freelance writer specializing in small business, personal finance, and marketing topics. Connect … Read more