How to Avoid Holiday Debt


By: , – Stacey L. Bradford, Family Circle
  :  16 comments   :  14,581 Views

Even Santa needs a budget.

Before you start spending, do a little math and figure out how much you can afford, says Bill Losey, a certified financial planner based in Wilton, New York. Keep it simple: Take any money you've been saving for the holidays and add it to your discretionary cash (the dough you don't need to live on). Divvy up that budget among all expenses. If you don't know where to start, look back at how you allocated your money last year. While there's no rule for budgeting in general, if you splurge in one area, cut back in another. For example, hosting a lavish dinner means you'll probably need to dial down on, say, gift giving. And don't make the common mistake of forgetting to account for all expenses, including holiday cards, stamps and end-of-year gratuities. 

Finally, if you need help sticking to your plan, use a smartphone app, such as Gift List Budget Shopper (iPhone, $1.99) or the Christmas Gift List Planner (Android, free). For extra motivation, check out's credit card payoff calculator to see how long it will take to reach a zero balance.
Present Value

Don't begin browsing until you've written down who you're shopping for and how much you want to spend on each of them. Remember, it doesn't have to be divided up equally, says Anna Post, an etiquette expert with the Emily Post Institute. Nor do you need to match other family members' price tags. Consider asking everyone to set a price limit, says Losey. Even better, agree to buy only for the kids and organize a gift exchange, such as a Secret Santa, for the adults ( can help). Stretch funds even further by buying presents with unused gift cards, airline miles (through an airline shopping portal) or points from another rewards program.
It's the Thought That Counts

Stash your credit card and give your time, suggests Sean Meshorer, author of The Bliss Experiment (Atria Books). The tech-savvy set can create an online photo montage, amateur chefs might cater a special meal, or you could invite your sister's kids for a sleepover (offering the priceless present of an evening out). Since the holidays are about being together, make them extra meaningful by organizing a family volunteer project, such as working at a local soup kitchen. "The experience will be far more memorable and valuable than any gift could be," says Meshorer.
Click here for more tips on how to avoid holiday debt from Family Circle.

More from Family Circle:Tell us how you are managing your finances this holiday season. 

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  • 16
    I never do well, at Christmas. I always spend far too much. I have a huge family to buy for, now that I'm on my second marriage. With my Mom, Bros. and sis-in-law, and husband, we draw names, so that does help. I have cut out, most of my friends, but one. I think in the next few yrs. I'll try to cut my gift giving, spending in half. I hope, I hope... - 12/11/2012   6:19:43 PM
  • 15
    I have always tried to pay cash and I generally buy gifts ON SALE earlier on in the year. This year I am also going to try to make a few of my gifts rather than purchasing them. I generally think that there are a lot of people who either expect too much or they figure that they can make up for other things by over giving. Give of yourself! I think on average I spent LESS than 100 bucks on both of my kids and they really were NOT wanting for anything. - 12/9/2012   5:25:38 PM
  • 14
    I have been married 44 yrs. and I've always been frugal. That is how I raised five children instead of just two. I use to save a $100 a month in the Christmas Club and then have $1200 to spend at Christmas but now I don't since my children are grown. I never had charge card bills in January. - 12/5/2012   7:59:42 PM
  • 13
    How to avoid holiday debt.... pay cash! - 12/5/2012   2:57:41 PM
  • 12
    We have limited gift giving at Christmas for our sons only. My husband and I decided to not exchange gifts after our second Christmas together. We choose to celebrate the birth of the Christ child because that is why we (not everyone) celebrate Christmas. For us, it is a religious holiday, not a day to go into debt for. - 12/5/2012   11:38:59 AM
    I save year round every pay right off my chq auto payment going to a savings account jsut for xmas we put $60 a pay. From this we pay for all decorations, party foods, secert santas, general gifts, xmas dinner ect. It never seems to be enough and we have to use our cash flow spending for the month of Dec. Christmas is so exspensive i can see how people would have to into debt for it. - 12/5/2012   10:40:17 AM
  • 10
    We have decided this year that only the little people (kids) will get gifts and we are limiting the amount we spend, or going in on a gift with another family member. Instead of the big Christmas dinner, we get together with the extended family on Christmas Eve for a soup dinner. Much less stress! - 12/5/2012   9:36:42 AM
  • 9
    I am so done with crazy, germy holiday crowds. For years now I have maintained a gift recipient list along with a list of possible things that would make easy gifts for "emergency" gifts. I shop online all year, buy and carefully store what I obtain. I don't even go to the mall to enjoy holiday decorations because my area mall has really cut down! I just relax with a cup of diet cocoa with calcium and stay warm. - 12/5/2012   7:59:35 AM
    I direct deposit from my weekly paycheck directly into my Christmas Club account. Upped it to $30 weekly when My first grandchild was born. This gives me a nice budget to work with at Christmas time. Grandchild #2 came in October. Time to add more to my weekly deposit. 😃 - 12/5/2012   6:21:04 AM
  • 7
    This past year, I have brought one gift for my three sons every month. So when Christmas comes they will have twelve gifts each. I bought gift cards clothes and electronics. Sales go on through out the year and that helps keep cost down. I also do shoe box gifts and gifts for the homeless. - 12/4/2012   11:23:56 PM
  • 6
    These are great gift ideas for people who want to live healthier. I am going to put the filtration pitcher on my wishlist. It will save me a lot of money that I now spend on bottled water. - 12/4/2012   4:48:53 PM
  • 5
    I have knitted a fair share if gifts this year, starting them early when traveling by car. I also make gifts of cookies, candy and sweet breads for some who don' enjoy or haven't time to bake. - 12/4/2012   4:08:23 PM
  • 4
    This year everyone is getting handmade gifts. I will make candies,spice mixes or knit items. - 12/4/2012   11:50:27 AM
    It is difficult to do, but our kids (grown and grandkids) know that there is not much we can do in the line of presents and each and every one understands. - 12/4/2012   10:19:04 AM
    We put aside money each month by putting it in a Christmas club account. We try to save generously. That way if we have extra money left after buying all the gifts we have some left over to give to charity. - 12/4/2012   9:41:02 AM
  • 1
    We don;t exchange gifts any more at the holidays, just get together to visit, relax and enjoy a good meal together. Life became so much simpler when we started celebrating the the holidays this way. It is easier to do with no kids involved, just adults. - 12/4/2012   7:03:50 AM

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