Bobservations: Tips for a Debt Free Christmas

Halloween is over, but is it possible that Christmas has become an even more frightening holiday? According to a Magnify Money survey, last year consumers added an average of $1,230 in Holiday debt! But wait, it gets even more terrifying, 78% of this debt was on store or credit cards, 14% were personal loans, and 7% used predatory payday or title loans. That is so scary I can feel the hair on the back of my neck stand up every time I read that.

I get it; there can be a lot of pressure to buy the perfect gift for everyone and that gets expensive. It is so easy to become caught up in the moment and convince yourself that you are making memories for your children, extended family, distant relatives, co-workers, or friends we used to hang out with, a former classmate, that person you met once at … well, you get the picture; the list can become endless. You want to be generous and get everyone something. After all, it is the season of giving. This Christmas I want to encourage you not to give in to that mindset. Challenge yourself to only buy gifts you can afford – with cash. By the way, being able to make monthly payments does not mean you can afford it. And it could mean that this year some people will not receive gifts from you. To some, maybe even you, that statement may sound harsh or even stingy, but being generous with someone else’s money, which is what happens when you get a loan or use a credit card, is not really being that generous.

So, as the holidays rapidly approach, I thought it would be a great time to share some tips on how to get through the Christmas season debt free.

5 Tips to Avoid Debt this Christmas

Add a line item to your budget for Christmas gifts – This means you need a budget. As Dave Ramsey teaches in FPU, a budget is simply telling your money where to go instead of wondering where it went. My wife and I put a small amount into the envelope designated for Christmas Gifts all year long. By doing this, when November and December arrive, we actually have the money to buy gifts. If you need help getting started on your budget, use the free budgeting tool EveryDollar.

Use Cash – Pay for every gift with the money you have saved, not store or credit cards.

Start Now – If you have not been putting money aside all year for Christmas, don’t panic. You still have about 8 weeks until Christmas, depending on when you read this. You can do this!

Shorten Your List – Honestly, before we started budgeting for Christmas, I could not remember what I bought and who I bought for in prior years. The list was too big and impersonal. My guess is that the folks who received those gifts would not remember what I bought them either. The first year we stayed on budget, Diane and I counted how much was in our Christmas Gifts envelope and then made a list of how much we would spend on each person. It shortened the list pretty quick. At first it felt weird, but eventually it became quite freeing.

Be Creative – There are other ways to express your love for others during the holidays than going into debt for them. Consider baking, write a letter or poem, make a movie of special times together, or use a memorable photograph and put it in a nice frame. I’ll admit that I am not the most creative person and would love it if you shared some of your creative ideas on this post for others to see.

This Christmas, let’s be committed to, “Owe nothing to anyone, except to love one another; for the one who loves another has fulfilled the law” ~Romans 13:8.