How to Have a Debt-Free Christmas Every Year

It’s easy to get lost in the more commercial aspects of the holiday season: the decor, the presents, the parties. It’s most certainly a time of over-indulgence in just about every way. And in a way that sort of reckless abandon is part of the magic of it all. But you know what’s not magical—at all? Going into debt just to have a big, bountiful Christmas. 

Debt is something that can take years to recover from—and it only tends to build upon itself, which means one bad holiday can put you in a very dark place, both financially and mentally. In fact, studies show that the simple act of worrying about credit card debt can negatively impact your overall wellness. 

Thankfully, as long as you employ a few smart strategies, you never have to find yourself in this position. And, yes, you can still have the holly, jolly holiday you envision. Here’s how:

1. Set a budget

Making a budget is one of the most important things you can do to manage your holiday spending. When you assign a specific dollar amount to the holiday, you’re less likely to spend blindly—a fast way to overspend. To come up with an accurate figure, write out each person’s name, then set a dollar amount based on their age and your relationship. Add up the total, and adjust if necessary. 

2. Establish a dedicated account

When you have a special place dedicated to your Christmas funds, you’ll be less likely to touch that money throughout the year. Plus, you’ll always know exactly how much you have to spend.

3. Use your credit card points

If you have a rewards-based credit card, use that card for the bulk of your purchases throughout the year. (Note: You should never put more than you can afford on a credit card, but if they’re purchases you’d make anyway, this is a great strategy.) At the end of each month, check your points balance. Then, swap those points for cash back, and put those funds toward holiday spending. Alternatively, some credit card companies allow you to use your points to shop directly at select retailers.

4. Take advantage of cash back opportunities

Browser extensions and websites, like Rakuten, essentially pay you to shop. When you shop through these services, those stores pay the platforms you’re shopping through a commission for the referral, then they share the commission with you in the form of cash back. Think of it as a retroactive discount on your purchase.

5. Use price comparison websites

Shop around for the best price without any extra time or effort with sites and browser extensions like Pricegrabber. In some cases, you can even set alerts—when the price of an item you’re interested in drops, the site will notify you.

6. Shop with gift cards

Most people have plenty of unused gift cards in their wallet or junk drawer. Why not use them to buy holiday presents? You’ll feel the sting less, since the money won’t be coming out of your bank account.

7. Try coupon codes

If you plan to shop online, download the browser extension Honey, which notifies you if the site you’re shopping on has any current deals or promotions running. It also aggregates coupon codes that might help you save. All you have to do is press a button, and the extension will run all of the various codes available to see which one yields the best final price.

8. Send digital cards

Saving on the holiday isn’t just about spending less on gifts. Items like holiday cards cost a pretty penny, too. Even the stamps you need to mail cards add up. Plus, as nice as it is to send and receive snail mail, these kinds of paper goods are inherently wasteful, since most people simply toss them. This year, try sending digital greetings with a site like Paperless Post.

9. Use loyalty points

Many stores—clothing and department stores, electronics retailers, and even grocery stores—offer incentives to regular shoppers. See if you can cash in any points you have to help save on everything from presents to the holiday meal.

10. Take advantage of sales

The best time to shop is early—really early. Post-holiday sales are some of the best of the year. And even if you can’t get it together to shop that far in advance, you can always use these sales to stock up on other Christmas expenses, like wrapping paper, gift bags, tape, and holiday stationery.

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