The holiday season can be stressful every year. Between countless events and parties and the gift giving, things can get out of hand. As a result, you end up paying off Christmas and the holidays months into the next year. When the holidays are done this year, let’s leave the cost of them behind and keep the memories. This is a good philosophy for any season, but especially the holiday season. With that, here are 9 ways to stay out of debt this holiday season.
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9 Ways To Stay Out Of Debt This Holiday Season
In general, you want to follow all smart money practices such as budgeting and not spending more than you make, but let’s get specific about what is important this holiday season.
1. Look At All Holiday Expenses
The cost of the holidays goes way beyond the gifts. Whether it is Christmas, Hanukah or the random birthday thrown in just to bleed you dry even more, there are a lot of ways to spend money during this time.
The gifts are one thing, but what about all the parties or fun family events? We’ll talk more about the events later, but you need to identify all the various activities you plan to do. This will give you an idea of how much to budget and save for.
Consider the following:
- Parties you are hosting
- Gifts for family, friends, co-workers, etc.
- Greeting cards with gifts
- Parties you are bringing something to
- Travel related expenses for both short and long trips
- All holiday related events
- Decorations including Christmas tree
- Charity giving opportunities
- Family photos or cards
As you can see, the cost of the holidays is extensive which is why January is full of resolutions involving money or weight loss.
2. Make A Sinking Fund
One of the best things you can do throughout the year is save up for a goal or expense using a sinking fund. A sinking fund is a fund that you contribute to every month until you hit your goal. That way, you can pay cash for the expense and it is spread throughout a series of contributions to lessen the impact on your monthly budget.
The best place to keep this money is in a high interest savings account like the ones suggested below. Some banks that you should consider are:
If the holidays are months away, then this is a great way to spread out the cost of the holidays out over the year.
If they are a couple months away, then it is probably too late to make a sinking fund, but don’t forget this approach for next year. I would start making one in January of the next year. That way you keep your monthly contribution as low as possible until the next holiday season.
Now, once it comes to the holidays, the money that you have saved is what you spend. We leave it there and don’t take debt into the next year. That is the beauty of the sinking fund. It helps prevent you from taking on more debt by being prepared.
3. Set A Budget
Now that you have reviewed all your related holiday expenses and possibly have a sinking fund to use, you need to set a budget.
Your budget is not based off the list of expenses. Your budget is based off the money you actually have available to spend. This is not based on how much room you have on your credit card (a common mistake I admittedly used to make). It is based on what you have in your checking account.
This is where some tough choices will have to be made. We’ll go more into specifics below, but my suggestion is to prioritize what is most important to you. Do your best to stretch the money you have available, but you need to stay within budget.
The money you have is the money you have as much as it sucks to say. The good news is that if you stay on budget you can leave Christmas or Hanukah behind without feeling bad about adding to your debt. Then next year, you’ll be in a better position to do more if you so choose.
4. Don’t Go To All The Special Events
Personally, we have seen an explosion of holiday related events in our area and assume the same for you.
It used to just be zoo lights that we would go to with a free pass (and dinner) thanks to my sister, but now there are several similar events with lights that could keep you busy all season. While it is fun to take the kids to these events, they add up and can easily break your budget.
So, pick one or two events to go to. Go to your favorites and just stick with it. You’ll appreciate it more than if you try doing everything. You can always switch events from year to year if you want.
If you can’t afford any events at all, that is fine. The good news is they’ll be back next year. If they aren’t, they weren’t worth going to anyways. No need to into debt for an evening that you probably won’t remember that much anyways.
Make the events you do go to special but know there will always be more around the corner.
5. Don’t Eat At The Special Events
When you do go to the special events, limit the amount of money you spend. Get any deals on tickets that you can, but the food is most likely overpriced and not that great anyways.
If you have kids, the cost of food seems to grow exponentially when going out.
So, do yourself a favor, and eat at home prior to going to these events. In addition to saving lots of money, everyone will have a full belly and that will help eliminate the hangriness that can ruin a fun holiday night.
6. To Black Friday Or Not To Black Friday
I am a big fan of black Friday. Most people act too good for black Friday, but I love it and I don’t care what they think because I do it right.
Now, I don’t get in lines with people trampling each other or getting in fights. That isn’t the typical Black Friday experience but so often we want to find the most extreme situation and suggest that everyone acts that way.
Realistically, black Friday just means that you can wake up early, go shopping, wait in long lines and hopefully get some good deals.
Now, I don’t shop for gifts on Black Friday. I shop for myself. A few of the stores that I buy clothes from have the entire store 50% off so I do all my clothes shopping that day. I also have bought other items for personal use on black Friday because I waited until they went on sale. That is how you do it right.
While I could buy gifts, black Friday probably isn’t the best time for me to do it.
There will be many sales, including cyber Monday, to take advantage of if the item you are buying is even on sale.
What you don’t want to do is go shopping and buy stuff because it is on sale if you weren’t going to buy it in the first place. That is a not a deal. That is a setback to your debt payoff.
7. Side Hustle Or Sell Stuff
So, let’s say you made a list of things that are important but just can’t afford them all. You can make cuts to your list, or you can find more money.
Maybe you can pick up more hours at work or maybe you can side hustle. Side hustles are great, but if you look at the reality of side hustles, they aren’t the best for quick cash. They are totally valid, but they work better for long term planning and combined with a sinking fund.
What is best for quick cash, is to sell stuff. Whether it be on eBay or Craigslist, you can make money selling your stuff that no longer has value to you.
Selling stuff is a great way to jumpstart any financial goal since most income increases take time, but selling stuff can provide an immediate return.
8. Get Creative!
Last year, we did something radical which saved us money and time.
We didn’t put any ornaments on the Christmas tree.
We had a 2-year-old and a 3-month-old and didn’t want to deal with the tree coming crashing down because they pulled too hard on an ornament. So, we simply put the tree up and had a bare tree with lights.
We saved lots of time and were not tempted to buy anymore ornaments. I am a natural spender and always looking for new things, so I have to say no to that stuff. The tree still looked great though and the 2-year-old loved it. Now, he isn’t such a concern to knock over the tree but the now 15-month-old is relentless and will conquer that tree if we put ornaments on it. Therefore, no ornaments this year and if it was just up to me there would be no tree. Since it is not fully up to me, there will be a tree.
I am not telling you to not put ornaments up. I am here to tell you to get creative and find ways to make your holidays easier and know that it is OK if it is not standard practice.
Maybe you hand make a bunch of gifts this year, say no to greeting cards or don’t decorate at all this year.
There is so much stress to be had sometimes it just isn’t worth it. You feel as though you are getting squeezed from all angles that you decide to go a different route and that is OK.
So, think about what you can do different this year that will alleviate the stress of time and money and I bet you won’t miss it much.
9. It Is OK To Say No
So often we want to create the perfect holiday experience on all fronts. The “perfect holiday” though can come at the expense of the rest of the year. That makes it less “perfect” if you ask me.
In reality, there is no “perfect” holiday, but you could get close and it might take some time to get there while you work through paying off debt.
If you really think about those moments that you truly appreciate, it probably didn’t involve spending a ton of money and there was a level of imperfection involved anyways. Most likely, it was special because of who you were with.
So, have confidence in knowing that it is OK to say no. Since it is so tough to make things perfect anyways, saying no won’t make things less perfect.
With all the parties and events, the holidays can be crazy. Don’t feel you have to do it all. No need to be a recluse, but there will be plenty of events that you don’t need to do.
Prioritize what is important and come up with a plan to make it happen without going into debt.
Say ‘yes’ to no more debt and ‘no’ to the things that lead to debt.
You got this!
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Number 3 (set a budget) is so important. I don’t know how we’d handle Christmas without a budget. It’d be scary always wondering if we spent too much or wondering how long into the next year we’d have to make debt payments for all the gifts we bought! We also do a sinking fund, starting in January, so we don’t have to scramble the last half of the year.
Great approach! Unfortunately, so many don’t set a budget and do exactly what you said, pay it off months after Christmas.