How To Plan Ahead for a Debt-Free Holiday

Uh, didn’t Christmas just end? Why is there a holiday post in January? No, we didn’t make a mistake! Many of you are now packing up the decorations, hitting the gym to work off the holiday calories, and starting to dread the daily trip to the mailbox. Yup, those Christmas bills are going to start rolling in, and you’re preparing yourself for the continual circle of debt that happens every year: you spend all January through November paying off the Christmas bills only to find that as soon as you’re done, it’s December again! We’re here to help you make this coming Christmas (yes, the one that is 11 months away) a bit different, by helping you plan ahead all year to break that vicious cycle and end up with a debt free holiday.


It seems like Christmas surprises us every year, but in fact it’s pretty predictable. It always lands on the same day each year; always has, always will. So there’s really no reason to not be fully prepared for it when December rolls around. Christmas shouldn’t be considered an “emergency” and therefore money shouldn’t be taken out of savings (or put on a credit card) to pay for it. With a little forethought and a bit of planning, you can end up with having Christmas fully paid for, before it even gets here!

The first step towards a debt free holiday is pulling a Santa move and making a list. Yup, right now in January.

  • Write down every person you usually buy a gift for and also write down how much you want to spend on that person. When the time comes for shopping, stick to the budget and don’t spend more than you had budgeted for each person!
  • If you have any gift ideas for these people already, jot those down. It’s never too early to start thinking about gift ideas. Add to this list each time you think of something they might like. This makes gift buying more personal and takes the stress out of waiting until the last minute to decide what to get someone.
  • If you want to amp up your list, even consider adding other holiday expenses, such as decorations, gift wrapping supplies, events and parties, food, etc.
  • Add up the amounts and write down that number. That is your grand Christmas budget. That is the amount you must save up for from now until Christmas.
  • Divide that number by 11 (11 months from January through November) to see approximately how much you should save each month.
  • Then, start saving!

To help you save a little money this Christmas and instill a greater sense of contentment and gratitude in yourself and your family, consider limiting the gift buying this year.

  • You can do that by decreasing the amounts you spend on each person or decrease the people you buy for.
  • Make some homemade gifts which won’t cost you a lot of money but will be more special than anything else you can buy.
  • If your family has lots of kids, consider only buying gifts for the kids and not for the adults. Talk this over with all the family members involved and see if they agree to the idea (we bet you they will)!


Now it’s time to begin saving up for the Christmas budget that you’ve established.

Start by saving a little money each month from your paychecks and depositing it into an account specifically allocated for Christmas. Whether that account is an envelope where you save cash or a bank account where you can easily access money without fees or penalties come December, such as a money market account or a separate checking account, just have one place for putting your Christmas money.

A fun idea that incorporates saving monthly for Christmas and can be used along with saving cash or by itself depending on your shopping habits, is the gift card method. Simply buy a gift card (amount is up to you based on your budget) each month from January until November and save them all in an envelope. When it comes time for Christmas shopping, use your gift cards to pay for gifts. The gift cards can be generic VISA ones where you can use them anywhere or for specific stores that you know you buy Christmas gifts at. This helps take the hassle out of carrying around cash through the crowded holiday stores or having to balance the checkbook after a million purchases, knowing that you’ve already “paid for” Christmas throughout the year at a spread out pace.

If you have a yearly garage sale, use this year’s garage sale proceeds strictly towards your Christmas fund to give it a hefty boost. And it never hurts to look through your house and sell anything you no longer use, whether through Craigslist or Ebay. This gives you some extra Christmas cash and helps clear out the clutter before the new Christmas gifts arrive!

You may think saving throughout the year is the hardest part to all this, but it’s actually much easier than you think. The hard part is not touching that money you’ve been saving. Resist the temptation to use your Christmas money for other things throughout the year. You’ll be happy come December when you can go shopping with no guilt and no debt!


So you’ve planned and started saving. You’ve pretty much done it! There’s one more piece to ending up with a debt free holiday, and that’s learning how to buy smart.

Just like scrambling at the last minute to scrape up Christmas money is not smart, scrambling around on Christmas Eve for gifts isn’t either. You should have been keeping a list along with your budget on gift ideas. Having a list done so far in advance makes it easy to buy throughout the year. If you’re out shopping in July and you spot the perfect Christmas gift for your brother, don’t walk out of the store. Buy the gift! After all, you should have about 7 months worth of Christmas money already saved up. Be sure you use the Christmas money for the gift, and not your everyday money. Wouldn’t it be something if all your Christmas gift buying was completed by October (and already paid for)? That makes for one stress-free holiday.

As you buy your Christmas gifts throughout the year, wrap and gift tag them right away. This should help cut down on the temptation to buy more for that person if their gift is already beautifully wrapped and put away in the closet until Christmas morning.

Follow the classic advice of stocking up for next Christmas after this Christmas. As soon as the tree is out at the curb and the stockings are packed up, hit the stores for after Christmas sales and discounts. Buy anything from decorations to gift wrap to gifts for next year, all at great deals!

So go ahead and add “Plan for next Christmas” to your New Year’s Resolution list. Imagine the decreased stress and more enjoyment you will have next December if you don’t have to worry about post-Christmas bills piling up. Make this year count!

To help you get your New Year started off right financially, make a budget by following our tips in Budget Basics for Busy Moms!

Photo Credits: Advent Calendar By Jamie In Bytown (CC BY 2.0), Dani, Kristy T, Christmas Mall By Andi Graf (CC0 1.0)

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Dani lives in North Carolina with her two preschoolers. She is a stay-at-home/work-at-home mom who loves to clean and organize anything and everything. Her happiness is found in Jesus, days at the spa, and combating dark chocolate peanut butter cups with everyday workouts at the gym. She owns a wedding, lifestyle, and freelance photography business, Dani Nicole Photography.

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