Create a debt-free Christmas

photodune-6117039-christmas-tree-xsCelebrating the holidays can not only be expensive but also start a downward spiral of mounting debt. Many who celebrate Christmas are competitive about throwing the most extravagant parties, having the most elaborate decorations (think Clark Griswold) and don’t we all want to buy our family that must-have trendy Christmas gift that shoppers fight over in the mall? Without a budget and some careful spending, most of us will overspend this holiday season. In fact, the average American takes a minimum of six months to pay off holiday debt. Now those so-called Black Friday deals end up costing 20% more because of accumulated interest charges.

So how do you celebrate a memorable Christmas without being a Grinch? Try these tips out this year and the best gift you will give yourself is a debt-free new year!

  1.  Make a list of everyone you need to buy for.  If it’s good enough for Santa, it’s good enough for you.  Begin with family and friends, but don’t forget teachers, babysitters, the postal carrier, etc.
  2. Set a budget. Determine how much you will spend on each person. The smaller gifts can really add up and setting a price point for each person will help you to keep your finances in check. Don’t forget to include Christmas cards, postage, decorations, and entertainment in your budget.
  3.  Try a DIY Christmas. Consider giving homemade treats as gifts and making your own decorations. Involve the family and these gifts have even more meaning and creating lasting memories that are priceless.
  4. Pay in cash. By using cash to buy all of your Christmas gifts, you are more likely to stick to your budget. It’s tempting to spend more when you are using plastic.
  5. Take your time shopping. Christmas is always on December 25th, so why do we wait until after Thanksgiving to start shopping? Spend 12 months shopping for gifts and you will spread your spending over the entire year.
  6. Set up a Christmas fund. Consider putting $20 each week in a jar or piggy bank for your Christmas budget and you will have over $1,000 to spend on gifts! That’s equivalent to 2 pricy lattes and 2 trips to a fast food restaurant. Not only will you save the money, but you’ll also save the calories. Double bonus!

By trying these few simple changes in your spending this year, you can save hundreds or thousands and start the New Year off without being fearful of the mounting credit card debt.


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