Plan Now for a Debt-Free Christmas

Christmas Gifts

As we savor the last few weeks of summer before the start of school and the inevitable march of autumn, it may seem like an odd time to contemplate Christmas gifts. But if you want to make it through the holidays without going into debt, this is a great time to start preparing.

If you’re just joining us, here’s something important you need to know: Debt is a terrible thing. Borrowing money puts us in financial and spiritual slavery. Even if you’re borrowing money for something that seems like a noble cause (like buying Christmas gifts for your kids), it’s a bad idea and a dangerous habit that can lead you into serious consumer debt. Not a great way to celebrate the birth of our Savior.

For too many people, Christmas is a stressful time. Some of that stress comes from the pressure of buying gifts for friends and family members when money is tight. But this is all avoidable: You can eliminate holiday financial stress by preparing for your holiday expenses now.

Christmas shouldn’t be a stressful time: After all, we’re celebrating the most amazing event in the history of all humanity. But between the pressures of our modern culture of gift-based celebration and the genuine desire to bless people that we care about, it’s easy to feel stressed out about buying Christmas gifts. The simple act of having to go out and buy gifts can stress me out. But if you don’t exactly have the money to pay for those gifts, the stress can multiply.

That’s where debt comes in. Faced with gift-giving pressure and a shortage of cash, many people decide to put Christmas on a credit card. The widespread availability of consumer credit makes it easy to borrow money for Christmas presents. And when you’re not limited by the cash you have on hand, you’re likely to spend more money on gifts than you would otherwise. As a result, a lot of  folks have a merry Christmas, but face a cold, hard credit card bill come New Year’s Day.

The good news is that it doesn’t have to be this way. Some saving, preparation and expectation management can help you get ready for Christmas spending without going into debt. Here are a few tips to help you get started.

1) Start saving now.

The best way to avoid going into debt at the holidays is to have cash with which to buy Christmas gifts. And the best way to have cash at Christmas time is to save it ahead of time. So if you haven’t done so, start saving now. There’s a little more than four months between now and Christmas shopping season. If you can manage to set aside $100 per month beginning now, you can make it to the Christmas season with $400-$500 in cash to spend on gifts.

2) Trim your spending.

If having money to buy nice Christmas gifts is important to you, then it makes sense to do without some small indulgences between now and the holidays. Chances are that you spend plenty of money on things that you don’t really need. So go through your monthly spending now and see if there’s anything that you can trim — like restaurant spending — that will help you save more money for Christmas gifts. Every little bit helps.

3) Shop now for deals.

I’m no expert shopper, and I don’t pretend to know the best time to find deals on toys and other popular Christmas gifts. What I do know is that if you only shop in the three to four weeks before Christmas, you’re limiting yourself to the prices that are available during that time. Giving yourself extra time to shop can never hurt you — even if you don’t buy this summer, keeping an eye on prices now can help you make more strategic buying decisions. And there’s lots of technology, like price-watching websites, that can help you identify savings far in advance of the holidays.

4) Set your family’s expectations.

For parents, one of the worst feelings in the world is disappointing your children on Christmas. If you’re committed to getting through the holidays debt-free, and you have a pretty good idea now of what you’ll be able to spend on Christmas gifts, this is a good time of year to start setting expectations in your family. Explain to your children or other loved ones that Christmas may not be extravagant as what they’ve experienced in the past. And then explain why. If you can get them excited about the importance of living debt-free, you can make a really mark in their minds that will serve them well for the rest of their lives.

5) Build Christmas into your monthly budget.

In many ways, all of these suggestions are stop-gap measures for people who haven’t done anything so far to prepare for the holidays. The best way to have a debt-free Christmas is to save for it all year long by including a line item in your monthly budget. Laura and I have a certain amount of our monthly income earmarked to be used for Christmas gifts. We have that money automatically transferred into a set-aside savings account each month. By doing this, we reach the holidays each year with our Christmas budget fully funded.

If you haven’t prepared well for Christmas in the past, use this year as an opportunity to change that. Spend the next few months saving up cash to buy gifts with. And while you’re at it, make some permanent tweaks to your budget that will allow you to save for the holidays throughout the year.

That way, when Christmas does come around, you will enjoy peace on earth and good will toward men.


Photo by Pete. Used under Creative Commons License.

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