How to Avoid Holiday Debt, Starting Now


As we head into the holiday season, there are some steps we can all take to help maximize our enjoyment of this special time of year while minimizing our financial pain.

It’s easy to get swept up in all the hype and sentiments of the season, only to later wish we had done the holidays differently (see “Holiday Regrets”).

After the decorations have been put away and the bills start arriving, many people wish they had spent less money on gifts, less time in stores shopping, and less money on themselves while shopping for gifts. They wish they had spent more time with family and friends and more time reflecting on the religious/spiritual significance of the holiday season. And they wish they had given more money to charity. (See also: Giving to Charity Is Great. But How Do You Pick One?)

Since so many regrets center on money, here are three ways to do the whole holiday thing better this year.

Be Like Santa

Say what you will about jolly old Saint Nick (sure, he could stand to lose a few pounds), but one of his many good characteristics is that he’s a list-maker. He even checks his lists twice.

One of the best ways to avoid overspending this year is to make a gift list and use it to set a gift budget. You can download a simple gift list form (PDF) or make your own. Just write down who you plan to buy gifts for and set a budget. How much will you spend on each person? How much in total?

Of course, set your gift budget at a level that you can afford without going into debt, and then stick to that budget. And there’s the rub. According to the National Retail Federation, holiday shoppers are planning to spend an average of over $700 on gifts and other seasonal merchandise this year. That’s far more than the amount most people can afford to spend on gifts for all occasions throughout the entire year!

One way to stick to a reasonable gift budget is to…

Be Like Scrooge

Take a good look at your gift list and see if there’s a person or two who you could approach with this radical idea — “How about if we don’t exchange gifts this year?”

It’s not really about being Scrooge-like. It’s about being sane-like.

Besides, what people often value more than material gifts is the gift of time. Pick a date to get together for a potluck meal at some point during the holidays. Or swap handmade gift certificates good for a certain amount of time helping each other with a chore or hobby at some other point in the year.

Is your giftee a gardener? Give her a certificate good for two hours or gardening time. Sure, your shoveling and tilling will be helpful, but spending time together is the main point.

There are probably people on your list who would welcome this idea. They’d love to be relieved of the pressure to buy so many gifts, and taking you off their list will help.

Then again, others won’t welcome this idea. For them…

Be Yourself

When I look around our house, I see several items that people made for us as gifts. I remember who gave them to us, and I remember the occasion.

Ask me what people bought for me last year, though, and I honestly can’t remember most of the presents.

Are you a woodworker? A sewer? A baker? Even a plate of cookies can be more meaningful to people than another sweater.

While handmade gifts may require more time than dashing off a quick online order, they’re usually less expensive. And in terms of memory making, they have far greater staying power than store-bought gifts.

I have a friend whose wife bakes pies each year during the holidays and distributes them to friends. They’ve become legendary.

Not only do recipients get a tasty homemade treat, but they get a nice (inexpensive) pie plate as well that creates warm lasting memories.

What’s been your experience with setting and sticking to a gift budget, agreeing with a friend not to swap gifts anymore, or making/receiving homemade gifts?

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Meg Favreau's picture

I find that starting early -- or at least planning early -- is one of the biggest keys in sensible holiday spending. Has anybody already started making or buying gifts for this year?

Kentin Waits's picture

Great ideas. I especially like the suggestion about making gifts for special people in our lives. I've already begun my holiday shopping and am taking a very slow, measured approach - making a few things, putting together some gift baskets, etc. I'm trying to save some cash by getting a head start and keeping an eye out for bargains. :)

Guest's picture

I love Christmas but I hate all the commercials encouraging us to spend spend spend! I’ve shopped till I’ve dropped but this year I told my family I was cutting back and the whole family has cut back. We agreed Christmas is more about spending time together and less about spending money.

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