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How to Stay Out of Debt During the Holidays

Tempted to spend lavishly and spontaneously this holiday season? Looking for someone to blame? Leave the three wise men out of it.

Yes, they launched the tradition of bestowing expensive gifts at Christmastime, and more than 2,000 years later, we’re still at it.

The major difference is those three ancient kings had (a) a plan and (b) really deep pockets. Us? Not so much.

We’re about to spend an average of nearly $1,500 during the 2019 holiday season, with roughly $920 of that going to gifts, up 4% from last year … and we’re planning to put it on credit cards.

What are the implications? This is not exactly breaking news.

Total U.S. gift spending will peak above $1 trillion for the first time.

Shot: With at least one survey showing more than half of us feeling pressured to bust our holiday budgets, we plan to finance our merrymaking by leveraging our New Year’s income: 61% who carry credit card balances plan to add to their deficit.

Chaser: This time next year — just like now — there probably will be another 35 million Americans with debt lingering from the previous holiday season.

“Buying gifts for others can be such a fun experience that sometimes financial constraints go out the window and debt walks in the door,” says financial advocate Patrick Beckman. “The worst thing you can do is to buy gifts for others without considering the potential cost for those gifts. Planning ahead of time can make a big difference, but the real key is to be disciplined while shopping.”

It’s time we got a grip.

Managing Those Post-Christmas Debts

It should come as no surprise that Google searches for “how to pay off credit card debt” surge in January and February. With holiday splurging in the rearview mirror, the moment arrives to treat our holiday spending hangover.

Holiday spending credit card debt is no different than any other credit card debt. How you whittle it down isn’t different, either. You can snowball (pay off each lowest balance in turn); avalanche (pay off debt with the highest interest first); consolidate your debt; and apply your skills and/or resources to a temporary gig-economy job.

(Quiet tip: The federal government is hiring thousands for part-time opportunities to help conduct the 2020 census.)

Or you could get to the root of your personal financial troubles by consulting a nonprofit credit counseling service. Perhaps, once and for all, you can master the pressure of managing today’s needs and desires on the promise of tomorrow’s paycheck.

Get a Firm Grip on Your Spending Plan

Then again, if you haven’t already gone berserk with holiday spending cheer, there remains a chance and hope of taking the pressure off 2020.

“Money management during the holiday season is all about discipline and proactivity,” says credit analyst Yvette Glover. “While methods like creating a list or only spending on sales can be beneficial, at the end of the day, a conventional budget can be the biggest difference-maker in avoiding debt.”

Follow these tips for a more frugal holiday spending season.

Take a hard look at your gift budget.

Write down every name and gift-giving obligation and how much you’re planning to spend. If the bottom line is too large to manage without going deeper into debt (those who truly love you don’t want that), begin to trim.

Apple users have an app for that: Check out Santa’s Bag. Android users have other options.

Now is a perfect time to review last year’s holiday spending. Haul out your receipts or pull up your credit card statements. Were there surprises? Guess what: There always are surprises. Did you overspend on gifts for people only tangentially in your life? Are there similar folks on your list this year?

Examining last year’s spending “will give you an opportunity to cut unnecessary expenses and reduce spending on others,” says Jacob Dayan, founder and CEO at and “It also gives you a chance to find and reuse supplies and decorations from previous years you might have forgotten about.”

Even as you begin organizing your gift-giving spreadsheets, this year, skip some of the optional gift exchanges. This year, spend a little less on your obligatory gifts. (Are you giving someone a Roku device when a pouch of homemade cookies would do?)

And think hard about gifts that serve a dual purpose: “Instead of buying your partner another sweater,” says blogger Brianne Bell, who authors Frugal Minimalist Kitchen, “think of experience gifts like tickets to a show or a fun class. Gifting an experience does triple duty as a gift, a set date to spend time with your loved one, and money saved on your entertainment budget later in the year.”

While you’re sifting your options, do not discount the benefits of homemade gifts. Do you have a special skill? Photography? Cooking? Tour guide? Fishing guide? Golf? Accounting? Typing? Researching? Handiwork? Painting? Decorating? Draft a personal gift card that offers a certain number of hours using that talent on behalf of the recipient.

Maybe you’re crafty. “Homemade presents can save us money, and they’re also the right way of showing how much we care for people we love,” says Nikola Djurkovic, editor of “Anyone can buy a gift, but only a few will take their time to make something special.”

Ultimately, spending less almost certainly means more comparison shopping and advance planning. Nothing busts a budget bigger than panic buying on Christmas Eve.

Use shopping portals and smart savings apps.

The web abounds with savings opportunities that can be tacked onto sale items. Ibotta gets users cash back for items they already bought. Rakuten (formerly eBates) advises shoppers up front about cash rebates they can earn by buying from their partner retailers (and the rebate percentages soar during the holiday shopping season).

Consider, too, using cash-back cards. Wisely, of course. Because at all times you must …

Resist the temptation to earn credit card rewards.

Unless you have the wherewithal to pay off your holiday spending in the first couple of months, avoid spending big simply to get extra airline miles or other credit card bonuses. With credit card interest running from the high teens to high 20s, if you’re still carrying holiday bills on Independence Day, you’ll have paid dearly for those so-called bonuses.

On the other hand, if you have accumulated a boatload of credit card rewards points, now is an ideal time to use them, whether it’s for gifts or other near-mandatory holiday spending, such as the proper outfit for your sister’s unavoidable ugly Christmas sweater party.

If you can’t make it an all-cash Christmas …

… make plans to begin a holiday savings account in the new year.

Although they lately have been renamed as holiday savings clubs, Christmas Club accounts — usually offered at local banks and credit unions — have been around for decades.

Savers arrange to make regular deposits to their accounts, usually through payroll deduction. In exchange for keeping their hands out of the pot (which can trigger fees and penalties), shortly ahead of the shopping season, depositors receive a check equal to their balance plus the amount of interest their account has earned.

Just don’t expect the interest rate to be particularly high. If you have the discipline to resist a growing savings balance, you can find better interest rate returns with online savings accounts. You also can shop financial institutions that offer cash bonuses for opening new savings accounts.

Uncertain about your commitment to discipline? Get yourself a savings buddy. “Grab a friend and hold each other accountable,” says Lending Club financial health officer Anuj Nayar. “It’s easier with a group, and you can celebrate your financial milestones with inexpensive or free activities.”

No matter which way you save, imagine socking away $25 every pay period from January through Halloween. Assuming a paycheck every other week, you’d approach next year’s Christmas splurge with a bit more than $1,000 in your Black Friday war chest — then welcome January 2021 with nothing more than the joy of the season to remember.

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet.

Piggy bank wrapped in Christmas lights

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