Have a Debt-Free Christmas

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The holiday season can be disastrous for your finances and leave you with a giant debt hangover if you aren’t careful.   Americans racked up more than $1,000 in debt during the 2018 holiday season.  What is even worse, 28% of shoppers weren’t even done paying off debt from the prior year. They just keep piling on more and more debt. They haven’t yet learned how to have a debt-free Christmas.

The holidays are a time of celebrations and festivity, but that doesn’t mean that you need to ruin your finances. It is absolutely possible (and easier than you think) to have a debt-free Christmas and holiday season by following these simple and proven tips.

Tips on How to Have a Debt-Free Christmas

Save All Year Long

Technology makes it incredibly easy to save money for your holiday spending.  Most banks have a way that you can auto-save during the year (meaning that you automatically move money into a savings account).

You can also check out apps like Stash and Acorn which provide a way to micro-invest.   Micro-investing is saving money and investing a small amount of money at a time. Even if you save only $20 a week, you will have over $1,000 over the course of a year.  Every little bit that you save helps and will provide you with enough cash to have a debt-free Christmas.

Stick to a Budget

Creating and sticking to a holiday budget helps you avoid debt during the holiday season.   Sit down and write down every gift that you will need to buy and a budget for each gift.  Not only will this help you stay on track financially allow you to have a debt-free Christmas, but it will help take some stress off when you are actually doing the shopping. Knowing that you already have money set aside for a gift is empowering and takes some anxiety out of the shopping experience. It allows you to put your energy into finding the right gift, rather than how you are going to afford it.

When it comes to budgeting, don’t stop with gifts.  Spending around the holidays ramps up in other ways such as entertaining costs, travel costs (including gas!), and clothing expenses. Make sure to factor in these expenses when you are setting a budget as they tend to creep up but can be pretty significant.

Another tip when it comes to budgeting, make sure that you keep a record of how much you spent and reflect on it in January. This should be the starting point for how much you should aim to save for the next holiday season.  Take that amount you spent, make any adjustments, divide it by pay period and you have how much you need to set aside for next year.

Homemade Gifts

Some of my favorite gifts that I have ever received are homemade and personal. Instead of buying things for people, look for ways that you can make homemade gifts or gift experiences.  Not only will this save you money but it will be much more memorable for the recipient. Seriously, how many candles can one get?  Not very crafty? You don’t have to be, you can get a ton of inspiration from Pinterest and Instagram!

Use Reward Points

Another way to have a debt-free Christmas is to utilize those unused credit card rewards points that you have sitting around. One Christmas, I was able to knock off about half of my Christmas gifts by just using credit card points (that I didn’t even realize I had).  Credit card points and rewards can add up quickly so make sure to check out how much you have available.

Side Hustle

With the gig economy, it is incredibly easy to find ways to supplement your income or earn a little extra cash for the holidays in order to have a debt-free Christmas.   Become a Shipt driver or deliver for grub hub in the months leading up to the holidays. The beauty of these types of side hustles is that you can work them around your schedule. You can work for an hour of 12 hours, whichever works best for you!

Have a special skill or interest? You can also do some side jobs or provide some coaching to others in your field. Starting is as simple as posting on your local Facebook page.

An ancillary bonus is that not only do side hustles allow you to make extra money, but they also keep you busy so you actually spend less too.   It’s a win-win!

Unused Gift Cards

Everyone has old gift cards lying around. Maybe you only have a few dollars remaining on them or they are to stores that you don’t shop at.  Get them out of your junk drawer and put them to good use.  Sell unused gift cards on sites like Cardpool or Raise.  You can sell them for cash or for other gift cards that you can use for gifts.

Check your old purse, junk drawers, and your car glovebox. These add up very quickly!

Clear Out Clutter

Similarly, the holidays serve as a great time to clear out old stuff to make room for the new.  Hold a yard sale,  sell at a consignment shop, or use the Facebook marketplace to get rid of old items.   If you have kids, look for children’s resale shops like Once Upon a Child which gives you cash on the spot.   The sale of your old items can add up quickly and supply you with enough cash to avoid holiday debt. Plus, you get rid of things that are just taking up space!

Gift Exchanges

Another great way to cut down costs and have a debt-free Christmas is to look for ways to do gift exchanges instead of giving everyone a gift. For example,  instead of buying for all of your cousins, suggest a gift white elephant gift exchange and limit the price to $25.   This reduces your costs but can also be a ton of fun.  Our family does one and it is always fun to see what everyone bought and try to figure out who bought it.  You can also set themes around it to make it even more memorable and fun such as homemade gifts only, local sports, or cozy winter nights.   It’s the perfect way to reduce the amount of money you spend and the time that you spend shopping.

By following these steps, you will easily have a debt-free Christmas. One that you can enjoy guilt-free.

What are your tips to help you avoid holiday debt?    Leave a comment belOW

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