7 Ways Not To Go Into Debt This Christmas

by Hank Coleman

Ways not to go into debt this ChristmasThings are rough this year for many families across the country, but that doesn’t mean that you should add to your debt to make up for it this holiday season. It is okay to tell your children that Santa is broke this year. They probably already know that something is up either thanks to the news on TV or their incredible sixth sense about how grownups are feeling. One of the worst things that you can do though is trying to keep up with the status quo. Here are seven great ways to avoid adding to your debt this Christmas.

1. Use Your Credit Card Reward Points – My wife and I love to earn reward points with our credit card. We use the points at the end of each year as a way to get free gift cards that we ultimately give to our friends and family members each Christmas. 

Those reward points that we earned throughout the year help supplement our gift giving and helps to keep us from going into debt this Christmas and every holiday season. You can find great deals on reward points when you compare credit cards and pick the right one that will earn you the most points on the things that you buy most.

2. Earn Free Gift Cards – One thing that I love during the holidays are the deals that retailers and especially restaurants give when you purchase gift cards to give as gifts. Many national restaurant chains offer deals such as giving away a free $10 gift card when you purchase $25 worth of gift cards.

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The card can be great ways to get gift cards to give to your loved ones during the holidays doing something that you normally do anyway (go out to eat). You can also use these gift cards to save you money while eating out at restaurants as well. Whether you give these extra gift cards to friends or save them for yourself, they can be a great way to save money and avoid debt this Christmas.

Giftcardmall.com offers online access to hundreds of the best retail branded gift cards like Nordstrom, Home Depot, iTunes, Starbucks and AMC. Your customers will love our gift cards delivered via email or traditional mail! Offered in a range of denominations and shipped only within the United States, the cards can be used online or on location as the issuing retailer. Customized gift cards are also available by uploading photos and images. 

GiftCardMall.com helps you create gifts as unique as your loved ones. From custom Visa Gift Cards to store gift cards and e-gift cards, GiftCardMall.com is your one stop shop for celebrating individuals. 

3. Comparison Shop Online & With SmartPhone – One thing that a friend said to me recently really struck a chord. He said that he never pays retail prices online for anything. He taught me that he always looks for deals and checks comparison sites before making a purchase.

He also checks websites like RetailMeNot.com to find some of the best online coupons before buying any items or even services online. This was a great tip that has ultimately saved me a lot of money over the past year or so. Now you can also compare prices right on your smartphone as well.

5. Make Hard Cuts To Your List – Do your aunts and cousins really need a Christmas gift from you this year? Would they understand if you told them that you are only giving gifts to your immediate family this year in order to save money and avoid adding to your debt this Christmas season? They will most likely understand your plight because we have all been struggling these past few years.

6. Layaway Is Making A Comeback – Wal-Mart hit the mark this holiday season by bringing back layaway, and they are leading the charge among other retailers bringing back the once popular holiday staple. Using layaway is a great way to force you to space out the payments for your gifts this holiday season. Instead of going further into debt this Christmas, using layaway can help you purchase your gifts this year with payments that you can afford.

7. Set Spending Limits This Year – The hardest word to say in the English language is no. No! But, it is a critical one in my family when it comes to staying out of debt this Christmas. My wife and I set a spending limit for the holidays and all of the gifts we give. While budgeting is not a fun topic for anyone, it is incredibly important. You have to have a spending plan and set a limit to keep yourself and your family out of debt this Christmas.

Did you already miss the boat this year? Now is the time to start thinking about next year. Do you spend the average $500 during the holidays on gifts? If you saved $40 per month or $20 per paycheck, you could have a debt free Christmas next year. It is time to bring back the Christmas Club Savings Accounts, or you can just create your own.

How do you avoid adding debt during the holidays? Let me know your tactics in the comment section!

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About Hank Coleman

Hank Coleman is the founder of Money Q&A, an Iraq combat veteran, a Dr. Pepper addict, and a self-proclaimed investing junkie. He has written extensively for many nationally known financial websites and publications. Hank holds a Master’s Degree in Finance and a graduate certificate in personal financial planning. Email him directly at Hank[at]MoneyQandA.com.

Hank Coleman has written 582 articles on Money Q&A. Learn more about Money Q&A on Twitter @MoneyQandA and @HankColeman.

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{ 16 comments… read them below or add one }


Those are all great suggestions. (Well, cutting people off of your list isn’t so much great as sometimes necessary.)

Last year I managed to do all of my Christmas shopping with my credit card cash back, an Amazon gift card I received for completing the last part of a survey that I’d started freshman year (and completely forgot about — nice surprise!) and a B&N gift card I’d been carrying around for a couple of years. I feel a little bad about using gift cards to buy Christmas presents because it feels like cheating, but they were to places I was doing my shopping anyway and it opened up my options as far as what I could afford. Money is always tight at the end of the semester, and I knew I wouldn’t have another paycheck coming in until late January so I set myself a goal of not lowering my bank account balances, and I mostly succeeded. Looking back at the spreadsheet I was tracking everything on, I spent about $40.



Penny, thanks for the comment! I understand what you mean about gift cards, but you shouldn’t feel guilty about using them if you have them. I do hate giving them as gifts some times though because they are a lot less personal. I would like to think that I know someone and what they would like if I am putting them on my slim list of actual gift receipients. But, using them instead of cash to buy the gifts is a great technique that you shouldn’t feel guilty about.


Marie at FamilyMoneyValues

I would caution folks to be careful using layaway – you may end up paying more than you should – in layaway fees.

Also, although many people give them – I never recommend giving gift cards – you are essentially locking in your recipient to do something they might not want or need to do. Give cash instead – but wrap it up in a fun way and let them know why you chose to give cash.


Eric J. Nisall - DollarVersity

I agree completely. Layaway is worse than credit cards for those who have trouble controlling their spending in my opinion, as the stores literally tell shoppers to buy more since they don’t have to pay right away.


Jon C

Wish I’d known about this last year. We already managed to blow through most of our christmas budget already, and we haven’t even started buying gifts. We bought our first house together this year, and this will be our first Christmas in our own property so we’re hoping that a lot of the expenses we incurred are one time only (lights, christmas tree stand, decorations, stockings!). Trying to make sure all credit cards are paid off as early as possible to avoid carrying any debt through to the new year! Looks like we’re doing home-made gifts this year!


Vince Thorne

Make a plan for the next 3 months. The goal is to budget the total spending, not just holiday spending. If you are going to spend more on gifts make sure you cutback somewhere else. Maybe give up on drinks when you eat out. Buy your soda at costco. have couple of ramen noodle nights. rent the latest movie on DVD instead of going to the theater. Carpool. I could go on forever but you get the point.


Hunter - Financially Consumed

Great tips Hank. I can always use debt avoidance expertise.


20's Finances

Cutting your expenses is a great way to keep from going in debt – you can try to be creative in shopping, but if you are still trying to keep up with the consumeristic society, you will fail… that’s my thought at least. 🙂



The number 1 thing I do is set spending limits. You can’t go wrong with #7. Ever!!!


Kevin @ Debteye

Another idea is to start a “pink elephant” gift exchange. I heard about it last year, and it’s a great way to only buy 1 gift instead of many!


Eric J. Nisall - DollarVersity

It is a really great guide here, Hank. I’m not so big on selling gift cards online, though. The reason these sites can offer such discounts when they sell the cards is the same reason t sucks to sell to them: the discount. Only the most popular store cards will bring you decent returns if you sell and even then it’s not close to the face value of the cards. Sometimes I think it may be better to just turn around and regift it rather than sell it for less.


Miss T @ Prairie Eco-Thrifter

How about adding doing no gifts. We haven’t done gifts the last couple years and it has worked out just fine. In fact I think people are happier. There is no stress to shop and we still have a lot of fun playing games and visiting.

When it comes to bdays and stuff, gifts depend on a need for help with something it seems. Like this year my mom in law is painting my laundry room as my present. It is awesome.



Great post. For years, we have paid cash for Christmas. It is SO nice. You don’t have any bills left after Christmas and it feel so good knowing that everything is paid for as they open their gifts. I wouldn’t do it any other way. If you have to cut back, do what you need to do. Just pay cash.


Paul @ The Frugal Toad

Great tips Hank! Starting off with a spending limit is the easiest way to prevent overspending! We are way over the spending average even though we are in grab bags.


Alexander Johnson

Great Article – The layaway option isn’t one I have though of, but I really like it!!



Hi Hank! I really love the part about making cuts to your gift list. I think most people can accept that focusing on priorities such as children and immediate family is the way to go, especially when budgets don’t allow for extras. Even if you invite some friends or coworkers over for a holiday coffee, and perhaps give them a simple card, would be appreciated by everyone!


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