How to Make it Through December Without Going Into Debt

celebration christmas

The holidays can be a money trap. You can work so hard all year to stick to your budget and then Christmas rolls around and suddenly the budget is out the window and you are spending with reckless abandon. But December should be just like any other month. While the budget maybe a little bigger, there should be a budget none the less. The sad truth is that a lot of people don’t know how much they spend during the holidays or underestimate what they really do. Even filling a stocking these days can top $100. So here are a few ways to avoid the holiday overspending and reduce the January regret.

Step one in the reduced December spending is to cut down your Christmas gift list. Do you really still need to give to Aunt Suzie? And while etiquette says that you should give to your mailman, newspaper delivery boy, and the bellhop, do you really need to? The first step to reigning in your holiday spending is to not spend at all. Getting something on sale does not mean you are saving: you are still spending whatever it cost. Don’t get caught up in the holiday hoopla and disregard your logical thinking. If you really feel it necessary to give gifts to these “extra’s” on the list, consider giving them a coupon for your services or bake something from your kitchen. Start thinking a little outside the box.

presentsHow many Christmas presents have you opened and then put aside never to use again? What would your gift recipients really like? A dinner with you, help food shopping during the year, a knitting lesson. Perhaps you can cull the list by talking with the person/people in advance.

Does it make sense to pull one name out of a hat to buy for instead of buying for everyone? Maybe the two of you can agree not to buy at all. You may find that taking your name off of their Christmas list is a gift in and of itself.

You can also consider shopping in an alternative way. Do you have points that you can redeem on your credit cards? For two years now, we have used this option to save a considerable amount of money shopping. Check your credit cards and frequent flier miles to see what you may be able to get. You may also want to consider giving them something you already have. I don’t mean re-gifting, but have they admired something of yours for years? Maybe this year is the year to pass it on.

Once you have considered alternative shopping and have made your list of people to shop for, use your overall budget to calculate how much you can spend on each person. Literally work out this figure and place the number next to the name on your shopping list. It is important to base this off of your overall budget and not work the other way. If you decided how much you should spend on the person and work up, you may find that you have exceeded your total amount to spend. In our culture, it is difficult to remember that the amount you spend on a person does not reflect your feelings for that person.

In fact, I might argue that the amount of TIME you spend trying to get the right gift is a better reflection of your feelings, AND anyone that truly cares for you would never want you to put yourself in debt to buy a gift. It is a little late now, but I would recommend for next year that you start Christmas shopping and planning in January. Not only does this give you more time to look for great sales; but if you choose, you can save a good deal of money by making some gifts or searching for something extra special at tag sales and flea markets especially if you have someone on your list that it into antiques or other nostalgia.

When you are ready to shop, be sure that you are doing it with cash. Do not put your gifts on credit cards hoping that you will get a Christmas bonus or thinking that you will pay it off next month. Gifts bought on credit unless they are paid off that month, quickly rise in cost as interest is tacked on. This again becomes a mental game because you think you spent the average $714 (according to the Gallup Poll November 2010) on Christmas, but $714 on credit for X number of months quickly rises to $800 and then $1,000. If you want to stick to your budget, do it with cash. If you are ordering online and need to use a credit card, total your purchases immediately following the online shopping spree and send a payment into your card for that amount. Don’t even wait for the bill. Unfortunately, extra cash on hand during December quickly disappears.

Another product that you have to be careful with during Christmas is payday loans. While being very fast and convenient, they can quickly lead you into debt. So, if you still need to apply for some extra cash in a way of second chance loans – do it from reputable websites only.

As you plan to actually shop with the list that you have created, think carefully about how you will go about shopping. If you are planning to go on a whole day shopping fest, are you adding to your bottom line by eating out for lunch and dinner? Might it be a better option to stop at just one or two stores? However, the reverse may be true if you live in a very remote area; the drive itself may add to the overall costs.

Perhaps then it is smarter to buy online. If you buy online though, be careful to check on shipping costs. The total cost of the item is not just the cost of the item, but instead is the cost of the item plus shipping and handling. Look for sites that offer free shipping and then be careful that all your items qualify for that rate. I cannot tell you how many times I have filled my basket online and promptly emptied it because I saw that the shipping costs outweighed the items I had purchased. I will also warn you not to spend more just to achieve the free shipping level. Spending money is not saving money.

Another holiday money sucker is food. Holiday dinners and parties can quickly add up. If you put out the full holiday spread, consider changing to a pot-luck dinner and have everyone bring a dish, or consider having a holiday brunch instead of dinner or maybe just hors d’oeuvres. Set the menu based on sales and not on your heart. Stock up before the deadline and use all your other grocery shopping savings tips. If you know that you’ll be doing a lot of baking for the holidays, buy up flour and other pantry essentials when they are on sale.

Of course, conversely, a funny December saving trick is to spend money. Often we are so busy with the holidays that we forget it is the end of the tax year too. Do you have any last-minute doctor appointments that you should fit it? Have you used all of your flexible spending benefits?

Have you contributed the maximum to your 401K? You may also want to consider contributing to a charity as a holiday gift.

This one will have a threefold effect. You will have a gift for a loved one, help an organization/ person in need, and will reap tax benefits. While these items cost a little more today, they’ll save you in the long run.

Most importantly enjoy the holidays. Don’t let money, or the lack thereof, taint the joy of the season. You may even find that focusing less on the commercial side of the holiday allows you to enjoy the season more and surely a January without credit card debt will be the best gift to yourself.