Avoiding Christmas Debt

It’s August, so why in world are we talking about Christmas?

Too many Americans whip out the plastic for Christmas spending and use credit cards to finance Christmas costs. The average consumer ends up with more than $1,000 of Christmas related debt on their credit cards each year. Last Christmas, 14 million Americans were still paying off holiday debt from the previous Christmas.  

More than 25% of all consumers said it took them until October the following year to pay off credit cards from their holiday spending. That’s 10 months of interest payments on top of whatever you spent on Christmas. If the interest rate on your credit card is 18%, and it takes you 10 months to pay off the Christmas debt, that $1,000 Christmas debt cost you an additional $154.

The reason so many people get into debt for Christmas is simple—they haven’t planned ahead. Now is the time to establish a budget for how much you’re going spend for Christmas and start saving some money each month between now and Christmas. This exercise will put you in much better financial shape come January 2018.

You may be thinking that you can’t possibly save all the money you need for Christmas in 4 months. So, my question to you is “How can you possibly afford to pay for those Christmas costs PLUS INTEREST in the months following Christmas?”

Planning ahead not only helps you avoid the last minute rush to buy presents, it also eliminates all the stress of shopping with a deadline, which can get us out of the Christmas spirit. What is really important at Christmas is the gift of God made man, not all of the toys, games, clothes, and electronics we buy for each other.

In an effort to maintain peace in the family, many people spend more than they should, something that becomes painfully obvious when credit card statements arrive in January. Now is the time to have the discussion with other family members and friends about cutting back on Christmas spending. They will probably be as relieved as you are to simplify things. Instead of trying to buy gifts for the whole family, draw names and have each person buy a present for one other person.

Look at your checking account and your credit card statements and figure out how much you spent last year for Christmas. That info will help you determine a reasonable amount to set aside each month for holiday spending.

Be sure to include ALL costs. If you host a Christmas party, that needs to be in your calculation for savings. If the holiday dinner is at your house and you take care of all the food and beverages, that needs to be in your budget.  Or if you travel to be with family in a different state, the costs to cover the trip need to be included in your planning. If your family lives in a different location there are shipping costs to consider, along with the cost of gifts.

Where many people get into trouble is not matching the list of gift recipients to their budget. Once infused with the gift-giving spirit, you may be tempted to include every aunt, uncle, fifth cousin, neighbor, and friend on your list. Before that happens, limit the number of names by dividing the amount of money you can reasonably spend by the number of people on your list.

For example, if your budget is $400 for gifts, determine whether it’s better, to spend $100 a piece on four people or attempt to please 20 people by buying each one a $20 present. More often than not, this will help you pare down your list to your immediate family.

Let’s be realistic—many of the gifts we give are not used by the recipient. They are tossed aside, ignored, re-gifted, returned for something else or donated to a non-profit organization. So why spend your hard earned money on something a person won’t use and doesn’t appreciate?

Thoughtful spending also means keeping some sense of sanity in the gifts for the children in your family.  It’s easy to over buy and shower the kids with everything they think they want, but is that really a good lesson for them to learn?

We had a mom share with us their formula for Christmas gift giving. Each child gets 5 presents: something to wear; something to share; something to read; something they need and something they want. This family discovered the formula for keeping their Christmas spending in bounds with their budget. And along with that they set reasonable expectations for the kids. This is a much more reasonable plan that buying the ten things the kids just have to have.

When it comes to the children in your life, pay attention during the year to ideas for gifts. You may get some great ideas as you analyze what interests them without the pressure to buy the perfect gift at the last minute. We were on vacation last week with our son and his family and in talking to the teenagers, we got several good ideas for Christmas gifts based on those conversations. Keep your ears open to the interests and activities of the children and teens in your life so you can pick up gifts throughout the year.

By starting your holiday shopping early or, better yet, by keeping your eyes peeled for bargains year-round, you’re almost certain to find great gifts at steep discounts—from toys and games to clothing and electronics.


If you are a crafty person, make some of the gifts. It’s very personal and often more appreciated than a store bought item. Summer is also a good time to get the kids involved in crafts. Maybe the kids can decorate an inexpensive picture frame with seashells. Add a picture of the family at the beach and you have a unique personalized present that grandparents will love and treasure. And that handmade gift would communicate how much you care for them without costing much.

Now is the time to plan for saving and keeping some sense of financial sanity in Christmas spending. Otherwise, you are into the holiday season and it is too hard to change what you’ve always been doing

The most important thing you and I can do is to remember why we’re celebrating Christmas—the birth of our savior, Jesus Christ. In the busyness of the holiday season, it takes an intentional effort to focus on the true meaning of Christmas. It takes a purposeful effort to have a spirit that’s ready to worship the Christ of Christmas without getting caught up in all the Christmas hype our culture throws at us.

The important thing is to prayerfully make the commitment to avoid all debt this Christmas. When you are tempted to overspend, think of this verse from James 1:16-17: “Do not be deceived, my beloved brothers: all good giving and every perfect gift is from above, coming down from the Father.”

The only gift anyone really needs at Christmas is the Baby Jesus.