4 Easy Ways to Avoid Holiday Debt

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The holidays are right around the corner. If you plan ahead and spend wisely there are various ways you can avoid holiday debt this year.

It’s hard to believe it, but the Holidays are just around the corner. Halloween is just a few weeks away which means that Christmas is a hop, skip and jump away. What this brings to my mind is shopping and how I can avoid Holiday debt. The average American spends roughly $750 (as of 2010) and this causes me to wonder how much was just put on a credit card with no knowledge of where the money is going to come from.

I am not saying you can’t give nice gifts during the Holidays, but what can we do to help avoid Holiday debt? Let’s take a look at some Holiday debt tips that I’ve learned over the years and how we can use them to be frugal and buy Holiday gifts at the same time.

#1 – Plan Ahead to Avoid Holiday Debt


I’ve written before about the envelope budget system and it can be extremely useful for Christmas shopping. My wife and I pull out money each month to go towards our Christmas budget. The amount we spend from year to year might vary, so we decide on an amount at the beginning of the year based off of the previous year plus any foreseeable changes.

Now, if you don’t use the cash system, that’s ok, you can still budget and avoid Holiday debt. Maybe it means you put the money aside in a savings account or finding a way to make extra money before Christmas to offset your costs.

My wife and I we actually end up using our credit card to earn points and then just use the cash to pay it off.

#2 – Shop Throughout the Year


I hate to shop, especially during the Holidays; I’d rather get a frontal lobotomy than go to the mall in the middle of December. By shopping throughout the year I can avoid the crowds and make it a much more delightful experience for all involved. The nice thing about shopping throughout the year is that you can take the time to be more frugal in your decision making and get the best gift for the recipient.

This also helps me avoid falling into the Holiday debt trap of all the “deals” offered during the peak of the Christmas shopping season. If you like to be involved in holiday tipping this can be a great time to stock up on gifts you might give out to service providers.

#3 – Look For Ways to Save on Your Shopping


There are deals to be had, if you know where to look for them to help you save money and avoid Holiday debt. My favorite place to do holiday shopping is on the internet. My wife has made an annual tradition of buying a majority of the kids’ Christmas presents online on Black Friday. She doesn’t have to stand in line or fight the crowds, but can still select things she knows they’ll like at deeply discounted prices. Dependent on the retailer, they may have some deals listed on their website or if you like them through Facebook.

One of my favorite sites to use is Retailmenot. They have deals listed from thousands of different stores and vendors. You simply type in the name and if they have it in their database a list of all the known available deals comes up. This is a great way to find what deals are available; I use it especially to find deals that offer free shipping as I hate to spend money on shipping.

Of course, I am sure many people are aware of Amazon’s free shipping of items if you spend over $35 or have Amazon Prime. All it takes is a little homework to find some frugal deals and avoid Holiday debt at the same time.

The holidays are right around the corner. If you plan ahead and spend wisely there are various ways you can avoid holiday debt this year.

#4 – Holiday Debt Can Linger Throughout the Year


People who just put the gifts they buy on their credit cards tend to let the balances sit there earning high interest for the credit card company. Credit cards in and of themselves aren’t bad, but using them to fund holiday purchases is not a wise use of money.

I know that when I had gotten myself into a credit card mess, part of the culprit was years of Holiday debt that was foolishly spent because I felt that I had to. If you know that paying for Holiday purchases is going to be a challenge for you, then look for ways to be frugal while at the same time allowing you to give gifts. Maybe it’s something homemade, maybe you limit who you give to, or maybe you organize Christmas caroling followed up by treats at your home afterwards. The point is that there can be alternatives to buying gifts you can’t afford which will put you in Holiday debt for months to come.


Buying gifts for loved ones is part of the fun of the Holidays. However, you can it and be frugal at the same time. What Holiday debt tips you follow?


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John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.

Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.

Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.


  • Pauline says:

    Shopping through the year is a very smart move, to get something thoughtful, and the best bargain on that something. I sometimes combine with credit card rewards too, when I am entitled to gifts that would please other, or gift cards for shops I don’t specially go to.

    • John says:

      Using rewards points is a great option Pauline, that way I guess you really don’t “feel” everything you spend. I find that shopping during the year helps me be more picky about what I get and not being caught up by getting a deal.

  • DC @ Young Adult Money says:

    Great tips, I like “shop throughout the year” but I’m not sure how many people actually do it or will do it even if they intend to. Second best thing to do wouuld be to plan ahead before you start shopping for people. We make a list of the gifts we plan on getting everyone so when we go shopping we are looking for specific gifts.

    • John says:

      I agree DC. I don’t know how many people do it. I think the media and companies have effectively sold the lure of Black Friday. Great point on the lists, we commonly do that as well.

  • Michelle says:

    I try and save my rewards points throughout the year as well. I have around $200 to put towards giftcards for presents!

  • Glen @ Monster Piggy Bank says:

    We were finding that we were spending a fortune every christmas. We were buying gifts for almost everyone you could think of and the spending was getting out of control.

    One day I said to my wife – We need to stop this madness! Fortunately she also hates shopping and she agreed with me. Today our families only buy gifts for the kids at christmas time and we all put a little bit of extra cash into peoples birthday presents to make up the deficit.

    I am really happy that we ended up going down this path, as I now no longer have to spend hours and hours of time in the shops with thousands of other people, plus our christmas shopping has been reduced to only a couple of hundred dollars!

    • John says:

      That’s a great idea Glen. You have to go with what works for you. I am glad as well to not have to deal with the craziness of shopping at the 11th hour with everyone else who forgot (i.e. put off) their shopping.

  • Holly@ClubThrifty says:

    Great tips! I am using credit card rewards to pay for gifts this year. I planned ahead. I also shop throughout the year if I see something that is a good deal.

    Good post!

    • John says:

      I am starting to see a theme here with rewards points with everyone. 🙂 Maybe I should start looking at that as a possibility as well.

  • Brian says:

    I have an irregular savings account all year for ‘gifts’. I also allocate a bit more at Christmas to this account so I make sure to pay for everything in cash!

    • John says:

      That’s a great plan to have Brian. I find that it’s much easier to save money throughout the year in small chunks so I don’t have to come up with the money all at once.

  • Sean @ One Smart Dollar says:

    Planning ahead is the best way to go. That way you know what you are going to buy and you don;t make any impulse purchases a along the way.

    • John says:

      Agreed Sean. Those impulse purchases can generally just take a toll on your budget and often times really aren’t the best thing for the person you’re buying for.

  • AverageJoe says:

    I hate doing extra freelancing, but during this time of year I consider it fun. One site pays me $25 per article, and although that’s not a high rate, I can knock out a few of these as “holiday money” that we spend on gifts and travel expenses.

    • John says:

      That’s a great point Joe. Doing a few at that amount can add up to a nice little bit that can go towards your spending as a whole.

  • Veronica Hill says:

    One year I was so fed up with having to buy a gift for everyone, I stopped. Instead, I sent out a thank you card and said, from now on I don’t want any presents from anyone. This may seem radical but I’m saving a lot of money. It’s rare enough as it is for me to see my family so THAT is the gift they receive 🙂

    • John says:

      I was waiting for the first person to say this! 🙂 That is always an option to be pursued. I know that we did that with our family for a few years, but then grandkids entered the picture and our parents broke the agreement. 🙂 If you’re just buying gifts because that’s what’s expected then is it really a gift? I’d much rather buy something for someone that I put thought into and knew they’d enjoy as opposed to just spending money on something just for the sake of giving someone something.

    • Kim@Eyesonthedollar says:

      Veronica, I feel the same way. Airline tickets are terribly expensive from where we live back to KY where my parents are. They don’t need anything and we don’t really either, so we buy gifts for my neices and nephews and the adults get the gift of our presense and pictures of our daughter. Works out great.

      • John says:

        Agreed Kim. I think kids, in general, get so much more enjoyment out of a gift than do adults. Plus, when you start adding up all the adults, it can just get so expensive. Being together is so much more worth it than having to feel like you have to buy something.

    • Jason Clayton | frugal habits says:

      I have the same problem with my family. Every year my brother-n-law and me always propose drawing names or something like that to limit the costs for everyone – but someone always cries foul. Maybe this year will be different.

      • John says:

        Drawing names is a great idea. You can even do a white elephant exchange and limit the cost to a certain amount so you only have to buy one adult gift as opposed to many gifts.

  • harry @ pf pro says:

    I start looking for gifts right now. I’m always on slick deals so now I can finally buy anything that I think would make a good gift. Sometimes I don’t even know who I’m buying it for but I buy it anyways haha

  • Jacob @ iheartbudgets says:

    We buy gifts throughout the year, and we even save a certain amount per month to put toward Christmas. This helps us limit our spending, and not shop in a panic at the end. We have done this for a few years, and it makes the experience much more pleasant…..AND CHEAP!

  • Savvy Scot says:

    Great post dude! I think this is something we are always familiar with; ”Why not, we are on holiday” attitude!! I think one of the key things is actually taking the time to research restaurants / activities etc. and making a proper budget. I always create a calculate budget and a worse-case scenario budget (i.e. going out to nice restaurants every night and doing an activity everyday) so I have a ballpark figure!

    • John says:

      Thanks! We’re very much the same way. I’d rather take a little bit of time to research and determine what we can spend as opposed to just throwing money at something and come at in the red at the end.

  • Bobbie @ Bogofdebt says:

    Great tips! I actually have most of my Christmas shopping done for the year! We have been taking advantage of the fact that we started saving in May and looking for great deals. For insatnce, this year for my fiance’s family we are only doing stocking stuffers. We found a awesome deal on razors for the guys so they get quite a few razors and we still have money to buy them other stuff.

  • John says:

    Thanks Bobbie! That’s awesome you have most of your shopping done for Christmas. We’re usually done in the summer or fall and finish up by doing a little online shopping on Black Friday. Thanks for stopping by.

  • Canadianbudgetbinder says:

    Great tips. We budget Christmas all year long so when the time comes to buy a gift the money is ready to rock and roll. We now only have to buy about 3 gifts so it’s not so bad, easy actually. We look for gifts all year long as we draw names at the beginning of the year. Drawing names especially as adults makes Christmas so much easier and we focus more on the gathering of family rather than how many gifts we have to buy. Cheers Mr.CBB

  • John says:

    That’s a great point Mr. CBB. I can see how doing that for adults would be a great idea. First, it cuts down on the gifts and Second, it makes more about spending time together as a family which is much more important than a gift.

  • femmefrugality says:

    Shopping throughout the year is always our number one plan of attack! Haha….whenever the boyfriend would ask his parents for something in January as a child, they would tell him they couldn’t do it because they had to pay the Santa Bill. Disenchanting? Yes. Truth? Absolutely.

  • John says:

    We love to have our shopping done early and that way we can just finish up what little we have left to get on Black Friday online. I remember a similar issue with my Birthday is in January so I was never allowed to ask for things during that time of year.

  • Rich@MoneyWisePastor says:

    Great tips! My wife and I have already figured out what we’re doing for Christmas for our five kids this year. And she has a goal to purchase everything before Thanksgiving so she won’t have to set foot in a store during the Christmas season. I, on the other hand, love to shop and people watch. So I’ll still have to look for a reason to hit the mall. 😉

    • John says:

      Thanks. My wife and I are much the same. We get most of it done early and then get a few things on Black Friday on the web.

  • Marie at Family Money Values says:

    Great ideas. How the heck do you get so many people to comment?

    • John says:

      Thanks Marie! I wish I knew. 🙂 Seriously though, I comment on quite a few myself as well as share a ton so I think a lot if it comes from that.

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