8 Tips for Avoiding the Holiday Debt Trap

Ho, Ho, Hold holiday debt this year while still celebrating the season in style. Start now getting control of your holiday budget with these tips.

by Sharri Smith

Every holiday season, we start with good intentions to stay on budget, but by New Year’s, we’re staring at bills that snowballed out of nowhere — or so it seems.

How can you stay on track and celebrate without overspending?

Try the following practical tips to keep your wallet (and peace of mind) intact.

1. Plan the Full Budget

Include everything — not just gifts but all those little extras that sneak up, like decorations, postage, holiday outfits, family photos and entertaining costs. Setting a budget isn’t just about listing gifts; it’s about capturing the season’s complete financial picture so there are no surprises.

2. Get Smart With Your Gift List

Start with a list of everyone you want to gift and jot down ideas as you go. This way, you won’t end up in the frantic last-minute shopping loop.

For larger families, name draws can be a budget-saver. Instead of everyone buying gifts for each person, each family member buys one gift, cutting down on expenses while keeping the tradition alive.

If you’re shopping for kids, limit it to three thoughtful gifts — something they need, something they want and something educational like a book or game. It keeps the holiday thoughtful and focused rather than overloaded with stuff they’ll barely remember.

3. Take Advantage of Free Shipping

It’s a common practice for the U.S. Postal Service, FedEx, UPS and other shipping companies to increase shipping rates from late October through early January. If ordering a gift online that qualifies for free shipping, it is probably cheaper to pay for gift wrapping and have the package delivered to the recipient.

4. Shop Like a Savvy Scrooge

Don’t head out (or click “Buy”) without a plan. Shop around for deals, use comparison sites, and set a spending limit before you go. If you’re getting a big-ticket item, check around for price-matching policies to make sure you get the best deal. With online shopping tools, finding bargains has never been easier.

If you and a sibling never know what to buy for your parents, team up and pool your resources for a single, meaningful gift. Splitting costs can help get them something they’ll genuinely appreciate without the price being too high for any one person.

5. Dip Into Savings Rather Than Debt

If your holiday budget is tight, it’s usually better to dip into a savings fund than rely on credit cards with high interest rates. Even if it means dipping into an account earning a modest interest rate, you’ll avoid paying credit card interest, which can be up to 29%.

6. Give the Gift of Time

Sometimes, the best gifts aren’t bought. Put together a coupon book with thoughtful, low-cost “gifts” that loved ones can redeem. This could include movie nights, cooking a special dinner, picking up the dry cleaning, or any small acts of kindness. It’s a memorable, unique gift they’ll appreciate long after the holiday season ends.

7. Stock Up at Post-Holiday Sales

After the holidays, stores discount holiday items, decorations, and wrapping supplies, sometimes by as much as 90%. Stock up on essentials for next year and consider grabbing general-purpose items that could work as gifts throughout the year, like table linens, cookware, or winter clothing.

8. Start Shopping for Next Year Early

If you want to sidestep holiday debt next December, look for gifts throughout the year. Garage sales, thrift stores and clearance racks are full of hidden gems, and you can find one-of-a-kind items that make thoughtful, budget-friendly gifts. You’ll have everything ready come December, avoiding the stress and costs of last-minute shopping.

Related:

• Sure-Fire Ways To Stick to Your Holiday Budget
• Is It Beginning To Look Like a Cash-Strapped Christmas?
• When Santa Can’t Afford Your Child’s Wish List

Reviewed October 2024