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13 Simple Tips to Have a Debt-Free Christmas

Christmas tree and decorations from a family having a debt-free christmas

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Christmas is the time of year where we can enjoy spending time with loved ones, giving gifts, and, for many, spend a lot of money. It's time to change that. In this article, we'll discuss how it's actually possible to have a debt-free Christmas, and how to do it.

We'll talk about things such as planning out your Christmas in July, making a list of all the Christmas-related expenses, and how to save money on your gifts. This way, you can have an unforgettable holiday season next Christmas that doesn't leave you in debt come January.

Let's jump right in.

Christmas Savings Plan for a Debt-Free Christmas

Having a Christmas savings plan that starts in the summer or earlier will greatly help you have a debt-free Christmas. Plan ahead and set up a bank account specifically designed for your Christmas fund. CIT Bank is a great place to open an online savings account where you can store your holiday money safely.

Estimate how much you're willing to or able to spend on Christmas. If you're unsure if you'll be able to save enough money by Christmas, try doing things now to lower your monthly living expenses. Check out this article, which will help you reduce your expenses.

Create a Christmas Holiday Budget

The next part of your Christmas savings plan is to create a Christmas budget. First, make a list of all Christmas-related expenses, from the gifts you plan on buying to decorations and food for your holiday party. Once you've made this list, add up how much money you estimate that it'll cost to buy these things.

If you don't have a home budget, you can download Clean Cut Finance's home budget template here. You can add one or more lines for your Christmas expenses in the template, such as decorations, gifts, food, and travel.

Assume you plan to spend $1,200 on Christmas, and Christmas is 6 months away. One option is to add “Christmas Spending” on your budget for $200 since $1,200 divided by 6 months is $200 per month. Now, you have money allocated monthly to cover Christmas. You can then transfer that $200 each month to your Christmas savings account until it's time to start spending.

Start Saving Money

You can start saving money as early as the January after the previous Christmas. This is a smart idea as shopping for Christmas as early as July means you'll save quite a bit of money versus shopping when everyone else is holiday shopping.

Set up recurring transfers from your checking account into savings every month, or once per paycheck. The key here is to make it automatic so that when payday comes around, you'll save without thinking, preventing you from using the money elsewhere. Use this walkthrough to automate your savings.

There are many great ways to save money for Christmas, including:

  • Reducing monthly living expenses to save more for the big day.
  • Using cashback apps on everyday spending to help fund your Christmas savings account.
  • Cutting spending across the board on things you don't need.
  • Going out to eat one less time per week.

How To Have a Debt-Free Christmas

Now that you have a plan for saving money, it's time to focus on how to use that plan to prevent yourself from sinking into credit card debt during your Christmas shopping and Christmas holiday family events and fun.

The key to having a debt-free Christmas is saving money first, instead of swiping your credit card and paying it off over several months after the holidays. The more you save and the less you spend, the more likely that you'll make it to and through Christmas without any Christmas debt waiting for you.

Below, we'll go over several ways to give you a head start for having a debt-free Christmas with your family.

1. Stick to Your Budget

You've created a budget, so now the trick is to stick to it. This means not spending more on each Christmas expense than you planned. One way to do this effectively is by creating cash envelopes where each envelope has cash in it with a specified amount of money that you intend to spend on travel, decor, gifts, food, etc.

Sticking to a budget may feel challenging sometimes, but reminding yourself how you'll feel when Christmas passes and you're not left with a heap of debt will help motivate you not to deviate.

2. Buy Gifts from Consignment Stores

One of the best ways to save money on Christmas shopping is by looking for gifts at consignment stores. These stores offer gently used clothing, jewelry, and other goods from private owners who want their products to be given a second life with someone else.

Some people may think that these are only good places to shop if you're not looking for new gifts, but that's not true. It's always worth checking out consignment shops, as they will help you save money on your Christmas shopping list.

Another way to buy gifts from consignment stores is by browsing through their online inventory for gift ideas and purchase them directly without leaving your home. This will prevent you from going to the store, where you may be tempted to buy things not originally on your list.

3. Use Cash

Studies show that when we use cash to buy things instead of credit cards, we spend less money because pain sensors are triggered when we hand over cash to someone versus when we swipe our credit card and place it back in our wallet.

If you find that you swipe your credit card too easily and spend too much, switch to cash and see how much you'll save on your Christmas shopping.

4. Use Coupons

Another way to save money on Christmas shopping is by using coupons. Coupons are a great way to get discounts at stores and other retail locations when you're looking for gifts or stocking stuffers.

When shopping online, use an app like Honey to save money whenever you go to a website's checkout. Honey automatically tests several coupon codes found around the internet to see which, if any, will give you the biggest discount. Honey is free to use, so there's no reason not to check it out and see how much you can save when shopping online.

Save Money With Honey When You Shop Online

Honey finds discount codes whenever you shop online. You'll also earn Honey Gold when you make qualifying online purchases. Honey Gold can be redeemed for gift cards and cash!

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5. Use Cash Back Apps

You can earn cashback by shopping online or by scanning your receipt with the app Swagbucks. Swagbucks is a site where you can fill out online surveys to earn money, but you can also earn cashback from hundreds of retailers by creating a free Swagbucks account, searching for the store you want to shop at, and using Swagbuck's app to go to the store's website. In addition, you may have the opportunity to scan a receipt if you shop in person as well.

You'll then earn generally 1-5% cashback on all purchases that you make, which will be credited to your Swagbucks account and can be cashed out via PayPal or through gift cards. You can use the payment to apply towards your credit card balance, or if you paid via PayPal or similar, reimburse the bank account that the money came from.

6. Limit Your Food and Party Budget

Christmas is a time for celebration, but the truth of the matter is that it isn't just about giving gifts. During Christmas time, much money is spent on food and drinks as well as parties and outings.

So be mindful of how much money you spend on food and drinks when hosting or attending gatherings during the Christmas season. Learning how to say “no” to yourself and others is a skill that will help you save money long-term and protect you from coming out of the holiday season with debt.

7. Don't Spend on Others What They Spend on You

It's pretty easy to feel pressured to spend on others roughly what they spend on you when it comes to gifts, but this is a financial trap. You could end up spending more than you can afford, especially if someone spends a lot on you. Additionally, you don't know the other person's financial situation and if they're shopping beyond their means for the holiday.

Keeping this in mind, always stick to your original plan and spend only what's in your budget when buying gifts for people who are buying you gifts. Remember, it's not the price of a gift that matters; it's the thinking that goes into picking the perfect gift for someone that shows how much they mean to you.

8. Shop Before Christmas Shopping Gets Big

You can get amazing deals on Christmas gifts on Black Friday and Cyber Monday, but did you know you can often get even better deals by shopping in the summer?

Don't wait until the Christmas shopping season gets into full swing to start buying gifts for people. Instead, shop in the summer and hit up all your favorite stores before everyone else starts shopping.

By shopping well before the season, you'll find more things in stock and have more opportunities to find better deals. Interestingly enough, the day after Christmas can be a great day to find amazing deals, as many people return gifts on this day.

9. Shop When Things Are On Sale

Shopping when things are on sale is a great way to save money to keep Christmas debt-free. As mentioned above, when you start shopping earlier, you have more opportunities to find things on sale.

Popular times of year to find things on sale include Spring break, Summer sales, back-to-school sales, and of course, Black Friday.

Many online stores also have mailing lists, where they'll send you alerts when they're having flash sales. Flash sales are often a great time to find discounted items you wouldn't be able to find otherwise.

10. Make Your Own Homemade Gifts

One of the most affordable ways to do gift-giving each Christmas is to make your own gifts for your loved ones. For example, say you're handy with crochet. You could create hats, blankets, scarves, and more for your loved ones, and you'd only be out the cost of yarn and the patterns should you be unable to find free patterns.

This is one way to keep Christmas debt-free without breaking the bank, as it's a way to DIY your gifts.

11. Plan Out Your Holiday Meals and Buy Early

Planning out your holiday meals has the benefits of saving you time and money. If you know what your family will eat, it will be easier for you to make a grocery list when people ask what they can bring.

Additionally, buying food early allows you to take advantage of specials that stores have as Christmas approaches. For example, stores often offer great deals on turkeys and other holiday staples.

Planning out your meals also means less food waste, as you know exactly what and how much to buy. An added benefit is less chaos at mealtime, as your spouse and kids will know what to expect without worrying about last-minute decisions.

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12. Spend Less on Christmas Decor

It's common to spend a lot on Christmas decor between the tree, the lights, ornaments, and similar. In order to promote having a debt-free Christmas, consider these alternatives:

  • Have a simpler Christmas tree by using one color or style.
  • Reuse ornaments year after year instead of buying new ones.
  • Keep your Christmas lights well-maintained so they last longer.
  • Buy your Christmas decor at discount stores.
  • Check out Pinterest for free DIY decor ideas and crafts.
  • Purchase decorations on clearance after Christmas is over to save money next year.

13. Make Some Extra Money

We've talked about saving money on things in order to have a debt-free Christmas, but what if you simply want to spend more, or you can't save any more than you have? This is when it makes sense to make more money throughout the year.

Common ways to boost your income are to:

You can read our Swagbucks review here and our Survey Junkie review here.

Wrapping It Up

In this article, we discussed how to have a debt-free Christmas so that you can fully enjoy your holiday season without feeling guilty when your credit card statement comes in afterward.

What will you do this Christmas season to stay under budget while still also having a wonderful time with friends and family?

2 thoughts on “13 Simple Tips to Have a Debt-Free Christmas”

  1. Stephanie

    I LOVE the shop consignment tip!!!! And don’t spend on others what they spend on you. That is two things that ruin a holiday gift-giving spirit. Thank you for pointing that out and reminding us not to go in debt trying to outdo others.

    1. I’m so glad this article was helpful for you! Yes, it’s tempting to try to keep up with others during the holidays, but we have to remember to resist that temptation 🙂

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