6 tips for a debt free Christmas

I wrote this post last year before Christmas, but since it is probably something on a lot of people’s minds I decided to repost it. Enjoy!

1. Start Saving Early

Duh. That is SO common-sense. Well, it is. But for some reason, I used to be surprised year after year at how hard Christmas hit my wallet. We know its coming. It is the same day every year. We can’t run from it, so we might as well save up for it. Sometimes these simple things take a while to sink into my skull, but I finally figured out that by saving up for it, I was a lot more likely to stay out of debt. Often times it is the simple things that have the biggest positive impacts on our finances. It is mid-November. Let’s start saving.

2. Create a budget for how much you will spend

Why after every Christmas are most people looking at huge credit card bills wondering, “Where did all that money go?” It is no different than any other area of our lives, if we don’t have a leash on it – it will be out of our control. Think of your money like your neighbor’s dog – Oh yeah, your neighbor thinks he has his dog under control. But every time he has the dog in the front yard it runs over and jumps on you. He thinks he has control of the dog, but I am sure if he had a leash on the beast, he wouldn’t let it jump on you when you are on your way to work. Of course you probably are not going to tell him that his dog is terribly behaved, just like my checkbook isn’t going to tell me that I have no control over my money. In order to have control you have to monitor it (dog or money) or have a system in place (put up a fence or make a budget) that will do it for you.

My wife and I started budgeting for giving a couple years ago, after we realized how out of hand our Christmas spending was getting. We just sat down and made a list of everyone we were going to buy a gift for that year. We wrote down (actually we used an Excel budgeting spreadsheet) how much we were going to spend on each person and totaled it up. We took this total figure and worked backwards from Christmas to see how much we would have to save each week in order to have enough. This helped us get motivated to start saving early.

3. Stick to your budget

After all, that is why you created it in the first place – right? If you decided to spend $20 on Billy Ray, then you have to be vigilant not to buy him that $50 toaster that is just glistening in the florescent light of the department store. Don’t get me wrong, there is nothing more fun than giving great presents, but you have to be honest with yourself and others about what you can spend. Trying to spend $100 on each person’s gift when you only have $10, isn’t being truthful and it is going to hurt you more than anyone else. This is the whole “keeping-up-with-the-Joneses” disease that is rampant these days. I think most people you are buying gifts for would want you to give from your heart, rather than under compulsion to spend huge amounts of money that you do not have.

4. Get Creative

When you are strapped for cash you have to use creativity to get the upper hand. A creative gift can often beat out the most expensive gift. I am not talking about, “it’s the thought that counts, dear.” I am talking about meeting a unique need or desire for that person. To give the best gifts you need to know about the recipient. Listen to what they talk about. Listen for clues as to what they are interested in. It probably isn’t a necktie or a picture frame. Shop accordingly.

5. Shop Online

A lot of brick-and-mortar stores can’t compete with the prices of the online stores even with the additional shipping costs. If you decide to do a bunch of shopping online this year, Amazon.com has a deal where you can ship as much as you want for a year for $79. And they are not just a bookstore anymore, they have everything from electronics to candles and you can even buy an engagement ring from them. You also should look at Ebates – they pay you for shopping via their website.

6. Start Shopping Early

I love the convenience of online shopping, but I also love going to the malls in the heart of the Christmas season. Granted, the parking normally isn’t fun, but I love Christmas (ask my wife and she will tell you how annoying I am – i.e. Christmas music starts November 1st) and it just doesn’t seem like Christmas to me without spending some time in the malls during the season. Since department stores start breaking out the Christmas decorations after the 4th of July sale (slight exaggeration, but not much), you have plenty of time to get started early and have the “spirit of Christmas.”

The key is to use early shopping to your advantage. Having your budget in mind, it gives you a lot more time to think about WHAT to buy everyone and gives you more opportunities to catch things on sale.