If you’re like me, the upcoming holiday season brings with it a mix of excitement and dread. While you might love the spirit of Christmas — holiday jingles, festive gatherings with those near and dear to you, the aroma of freshly baked cookies wafting from your kitchen — you might also fear digging into a debt hole to afford it all.
How much potential debt are we talking about here? According to a MagnifyMoney post-holiday debt survey, in 2018 Americans racked up more than $1,000 in debt from the holidays. This included everything from gifts to decorations to wrapping paper and travel.
Make a List, Check It Twice
Just like how you might budget for back-to-school season, a vacation, or other times of the year that make you feel like you’re burning through wads of cash, create a budget for holiday-related expenses. Start with a list of anything you might be spending on.
Your list might include: presents, travel-related expenses, outfits for festive gatherings, pet sitting or pet boarding, babysitter fees, wrapping paper, holiday decor, food for entertaining guests, and Lyft rides to and from parties. Next to each expense, jot down roughly how much you anticipate spending.
It helps to get granular, particularly with the gift portion. My brother and I divvy up gift-giving for our growing list of second cousins and note the age of each kid, a price range, as well as ideas on what to gift.
Skip Anything You Can
Here’s the hard part: To stick to a budget, you’ll want to skip anything you can. I know, your magnanimous self wants to go into all-out Santa mode and get a gift for everyone in your life. But the reality of your bank balance is telling you otherwise. Don’t want to kick off the new year with a heftier credit card balance because of the holidays? Go through your list and nix anyone you don’t deem necessary.
Consider giving batch gifts according to family or social groups. For instance, instead of purchasing stocking stuffers for everyone in your pool league, get a group gift. Or create a night-to-the-movies gift basket for your uncle’s family, instead of purchasing a present for each family member.
You can also try to cut back on how much you’ll be spending on other expenses. See if you can snag a cheaper flight to see your family over Christmas, or shop second-hand (or in your closet) for soiree garb.
Save in Batches
Saving $1,000 or however much you need by the holidays can feel daunting, to say the least. Especially if you are juggling other money goals and obligations, such as paying off your debt or saving for an emergency fund. It’s not like the money gods will magically clear your financial commitments so you can save for the holidays.
Instead, consider trying to save as much as you can in waves. For instance, if you anticipate getting a sweet bonus or are netting a fat sales commission through your work, tuck away a portion for the holidays. This works well for those with variable incomes such as myself. Since I freelance, I try to save whenever I’m having a flush month.
You can also set up auto-saving and put a small amount toward holiday expenses every week. So if you have eight weeks to save for the holidays, see if you can auto-transfer $50 a week. In two months, you’ll have $400 for holiday savings.
Stagger Your Spending
Here’s the fun part: To make your dollar stretch further, stagger your spending. I’m super nerdy about my money goals and jot down what I’d like to purchase each month for the holidays. In January, it’s deeply discounted gift wrap and greeting cards, and in the summer I’ll look for festive attire. You can purchase your tickets to fly home two months ahead of time, and stockpile the gifts all year long.
This not only enables you to scoop up savings when the deals are hot, but it alleviates the stress of cramming all your tasks and purchases into a few hectic weeks. I found a green sequined mini dress at a consignment shop at the end of summer for just $10. As I like to break from freelancing and take a holiday vacation during December, I try to spread out my spending as much as possible.
Use Gift Cards
Have a stack of partially spent gift cards from birthdays and holidays past? You can resell them on sites such as Cardpool, CardCash, and GiftCards.You can turn your gift card credit into cash, and put that toward the holidays.
For one of my personal credit cards, I like to redeem reward points for gift cards for department stores, restaurants, coffee shops, and drug stores. They certainly come in handy when you’re shopping around for sundry items, gifts or party supplies.
You can wait until closer to the holidays to redeem credit card points or get gift cards throughout the year. I personally like to cash in for gift cards at random times. That way, I can stock up on sale items earlier in the year.
Prepare for Debt As Needed
The reality is that despite your best efforts, you might have to go a bit into debt. If you anticipate having to put some of your expenses on a credit card, come up with a repayment plan that works for your budget. That way you can nip that debt in the bud pronto.
While there are myriad methods for avoiding holiday debt hangover, the skip and stagger approach is one that has worked for me throughout the years. It’s ideal for those who are running a bit behind on saving for the holidays, have variable income, and want to avoid end-of-the-year stress.