7 Ways To Stay Out of Holiday Debt

Wednesday, November 7, 2018

The holidays can be stressful for people with forced family gatherings and required attendance at office parties and other celebrations. Throw in the financial burden of gift-giving and it’s no wonder people experience extra stress during the holiday season.

The holidays are always an expensive time of year. In many cases, people must put purchases on their credit cards to cover cash flow shortfalls. They vow to pay it back on January 1st, however, many don’t and instead, end up carrying a high balance well into the new year. While a one-time high credit card bill isn't a big problem, if it continues to happen it could lead to a never-ending cycle of debt.

However, be encouraged that it's possible to break the cycle of going into debt during the holidays. If you're committed to improving your habits, you could even avoid going into debt altogether. All it requires is planning and commitment on your part. You may have to make some sacrifices but the reward will be worth your investment.

Check out the following list of seven ways to avoid going into debt this holiday season.

Smart Tips for Avoiding Holiday Debt

1. Comprise a Strategy

You want to be generous during the holidays but without the right strategies in place, buying gifts could easily blow your budget. That’s why a plan is so important. And, it has to be a realistic one, taking into account the actual amount you spent last year. That includes wrapping paper, gifts, and hospitality. Go through your list and identify any opportunities to lower the amount you spend this year. In doing so, you are being proactive about your budget and eliminating the need to use your credit cards.

Make detailed lists of everything you plan to buy this holiday season to ensure you don’t overspend or purchase something you don’t need. When deciding what to give and to whom, be honest with yourself. Do you have the spare cash without dipping into savings or racking up more debt? If the answer is no, then you’ll need to curb your list or the type of gifts you're going to give. Not everyone expects or even wants a holiday gift, so don't feel pressured into giving gifts to every single person you know.

2. Make a List and Stick to It

One of the quickest ways to lose control of your spending is to not have a list — or to have one but refuse to follow it. Whether you have three or 10 people to buy gifts for, you want to have a detailed plan as to what you will buy them and how much it will cost. If you stick to the list, there won't be any surprises and you may even be able to leave your credit card in your wallet.

List all of the gifts you plan to buy, including what you plan to give to charities. No matter how small the gift, write it on your list. The fewer surprises you have regarding money, the likelier you are to stay out of debt.

3. Avoid Store Credit Cards

Retailers aren’t the only ones that roll out deals during the holidays. Credit card companies typically offer various sign-up offers and deals, as well. After all, the more you charge to a store card, the more money they make — which is why consumers have to be very careful about charging holiday gifts.

If you can pay the balance in full and on time each month, a store credit card can be a smart move toward increasing your credit score and getting good deals on gifts. However, if you carry a balance each month, you will be hit with hefty fees in the form of double-digit interest rates and your credit score will decrease. The average retail charge card carries an APR between 15% to 20% and sometimes even more.  The last thing you want to do is chase rewards and open too many store credit cards. For responsible consumers, credit cards can be a way to save. Some consumers, for example, use their cash back credit cards during the holidays and then apply the rewards automatically to their balance.

4. Give More Creative Gifts

The holidays are all about sharing and showing your appreciation to family and friends — it's not a time to rack up debt. Sometimes the gifts that come from the heart are much more meaningful than the store-bought ones. If you are short on cash or simply want to get more meaning out of the gift-giving aspect of the holidays, consider a homemade gift. Baking a batch of chocolate chip cookies for a favorite aunt will mean more than store-bought ones. Knitting a scarf, sewing a pillow, or painting a picture can have more impact than less personal gifts and will cost less. Yes, creative gift-giving requires time, however, you might be surprised by how much you enjoy the process. More than likely, it won’t feel like a chore. Also, you can donate some of the money you save to your favorite charity. 

If you're not the crafty type, consider other creative ways to save on gifts. For instance, have a secret Santa or white elephant party instead of a gift exchange. It will limit the number of gifts everyone has to purchase and will inject entertainment and excitement into the holidays.

5. Swap Old Traditions for New Memories

Santa Claus is synonymous with Christmas — and, as a side effect, expecting heaps of presents under the tree have become the norm for many families. However, if you swap some of the more commercial traditions, you can save a ton of money and avoid racking up credit card debt. For instance, instead of getting a gift for everyone on your list, volunteer at a charity in their name. Go DIY with the decorations, adorning the house with homemade creations. Or, skip gift-giving altogether and take a trip instead. Your family will remember that long after they tick off the list of holiday gifts they received.

6. Save Up Cash in Advance

Thanks to the culture of gift-giving in America, retailers are usually in hiring mode during the holiday season, staffing up to handle the crowds. That affords you the ability to raise extra cash that can go toward holiday purchases. There are countless seasonal jobs in stores, restaurants, and other consumer-facing businesses. The gig economy has also opened up other opportunities for you to earn extra cash. You can get a side job driving for Uber, delivering groceries for DoorDash, or walking dogs for TaskRabbit to name a few. You can even become a freelance consultant on the side if you have a useful skill.

If you don't have the time or desire to get a part-time job, consider selling used goods. The Internet has made it very easy to unload your used clothing, devices, and appliances. Mobile apps like Poshmark or OfferUp act as local marketplaces where you can sell your items to people in your neighborhood. Allocate that cash for holiday spending so you won't need to rely on a credit card.

7. Decrease Your Daily Spending

Consider cutting costs on things you buy on a daily or monthly basis. For instance, you can make coffee at home instead of buying it at the coffee shop or, you could walk to work instead of taking the subway. If you start slashing your expenses a month before the holidays, you could save hundreds of dollars and then use that money to buy gifts. Decreasing your spending doesn’t require a complete overhaul of your lifestyle, though. If you find ways to cut the little expenses in advance, your savings will add up.

Final Thoughts

The holidays have long been associated with costly credit card debt as consumers try to celebrate the season with pricey gifts. If left unchecked, such habits create a vicious cycle where the high-interest rate debt climbs year after year. Thankfully, that doesn’t have to be your fate forever. There are ways to bankroll the holidays without relying on your credit card. Making a plan, sticking to it and thinking outside the box are surefire ways to ensure you don’t blow your holiday budget. Plus, swapping out commercialized traditions with more creative, heartfelt ones could spark new joy and lifelong memories that you might not experience otherwise.

What methods do you employ to save money during the holidays?

Brian Smith is a writer and financial consultant with over 16 years of professional experience. He continues to consult clients individually and through his writing. He lives and works in Chicago.


  1. We usually set out a set amount for holiday spending. And never go out of that moment because if we we may need to trade things in other important stuff like groceries. Depending on the festival, we allocate resources. And Christmas is where we splurge a lot. Has worked for us since we got married five years ago..


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