Top 7 Ways Not to Go into Debt this Christmas

How not to go into debt this Christmas

If things are rough this year for your family, that doesn’t mean that you should add to your debt this Christmas 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, or they have an incredible sixth sense about how grownups are feeling.

7 Ways Not To Go Into Debt This Christmas

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.

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.

Earn Free Gift Cards

One thing that I love during the holidays is 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.

The card can be a great way 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. offers online access to hundreds of the best retail branded gift cards like Nordstrom, Home Depot, iTunes, Starbucks, AMC, and much more. You can get your gift cards delivered via email or traditional mail! The cards can be used online or at the store location. Customized gift cards are also available by uploading photos and images. helps you create gifts as unique as your loved ones. From custom Visa Gift Cards, MasterCard Gift Cards, to store gift cards and e-gift cards, is your one-stop shop for celebrating individuals. 

Or, you can try is another leading online retailer of gift cards with an array of gift card products including personalized Visa Gift CardsMasterCard Gift Cards, eGift cards, and popular merchant gift cards including Best Buy, Home Depot, Sephora, and over a hundred others. offers gift cards in denominations from $10 to $500 with the average purchase above $120. Visa and MasterCard gift cards allow purchasers the option to personalize the gift card with a personal photo or image or to select from thousands of predesigned gift cards. All gift cards – whether plastic or electronic – can be enhanced with a personalized or pre-designed greeting card, including a wide selection of e-greeting cards from American Greetings®.

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 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.

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.

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 an average of $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.

Layaway Is Making A Comeback

Many retails are hitting the mark this holiday season by bringing back layaway, 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.

But, be careful…

Stores’ layaway programs are like state lotteries. They prey on the poorest and most uneducated in our society. Let me clue you in on a little secret. Layaway is great for stores, but it is typically a losing proposition for us consumers. Here’s why layaway is bad and you should consider staying away from layaway programs.

Layaway Is Bad Because You Spend Too Much

When you buy something on layaway, the cost of your purchase is divided into several payments. The full amount does not need to be paid for at the time of purchase. Layaway can help you not go into debt this Christmas.

This can lead to overspending. It is easy to buy more than you intended when you do not have to pay for those purchases right then. Layaways have a way of not keeping us honest with ourselves. It is all too often easier for undisciplined consumers to spend more than they can afford when they use a layaway program from a store.

Layaway Has Fees Like a Credit Card

You cannot escape fees whether you pay for your purchases all at once with a credit card or over time through a store’s layaway program. Fees added to the total cost of the items that you put on layaway. It is akin to the monthly interest that you will typically see on a credit card purchase as well. Here is a scary example.

Let’s suppose you went into a store last month (October) to layaway a $100 toy for Christmas. You put a down payment of $10 on your item and pay a $5 service fee for your layaway.

If you pay off your layaway, what you actually did was pay the equivalent to $5 in interest for a $90 loan for two months. That would equate to a 44% annual interest rate if you calculated it at an annual rate. Keep out of debt this Christmas with layaway.

Backing Out of a Layaway Will Cost You a Fee

When you buy something on layaway, you can find yourself still making impulse purchases. While you typically have the option of backing out of your purchases even when you buy them on layaway, most stores will require that you pay a fee to do so which will increase your total holiday spending if you are not careful.

Of course, avoiding an increase in spending during the holidays is the whole reason that you are using layaway in most cases. Stay out of debt this Christmas by limiting your purchases.

You Could Run Into Problems If You Don’t Pay

Depending on the store and its policies, you could potentially run into trouble if you miss a payment on your items that are laid away. If you fail to make the payments on time, the money that you have already spent on your items placed on layaway could be lost. Some stores may reimburse you for the money spent with a store credit or with a gift card, but your item could be gone that you tried to reserve.

There Is A Better Way Than Using Layaway

There is a better way to save for your Christmas or holiday presents instead of debt this Christmas and relying on layaway programs. It is the tried and true method of simply saving for your holiday spending ahead of time. You should start saving for next year’s Christmas presents in January.

Like baseball managers who say that the MLB World Series is won in May and June and not October, your holiday savings are not something you should start thinking about in the fall. The earlier that you start saving will help you avoid having to use programs such as layaway and credit cards that drain your bank account one fee at a time.

Paying upfront for your total cost is always the best way to go. Layaway programs are everywhere. You can’t enter a national retail store this holiday season without being inundated with propositions for layaway programs. The biggest stores in America have been hitting their programs hard for months now. But, there is a better way to spend your hard-earned money next holiday season. Layaway is not the answer.

How to Start a Holiday Gift Savings Fund Right Now

Why You Need to Start a Holiday Gift Savings Fund Right Now

Last year, Americans racked up an average of $986 on their credit cards during the holiday season according to a poll conducted by MagnifyMoney. There are better ways of giving a holiday gift than charging it on a credit card that you will be paying off well into the spring.

The holiday season will be here quicker than you think. Rather than racking up as much as $986 in debt on holiday spending, you can be proactive by starting to save now for the holiday gift giving season. It typically takes people up to five months to pay off credit card debt that they’ve racked up during the holiday gift giving season.

According to a @magnify_money poll, Americans with added an average of $986 holiday debt last year.Click To Tweet

Here are a few tips to help you grow a holiday gift savings fund now!

How to Start a Holiday Gift Savings Fund

Make a List Like Santa

Just like Santa Claus, you should make a list of everyone you want to give a holiday gift to this year. And, stick to it! Make a list of people you’re giving gifts to this year.

You will have to draw a hard line on who will receive gifts from you and who will not. You may want to start setting expectations now with friends and family. Tell them that you’re cutting down this year on your gift giving, but you’re upping your Christmas card list.

Know Your Christmas Budget

How much did you spend on holiday gifts last year? Were you close to the average of $986 we talked about above?

How many people does that number equate to? 10? 20? If you have a list of people and a budget for holiday gifts that you want to stick to, it can greatly help you to stay on plan and not deviate.

Invest Your Holiday Funds

Invest with Betterment

Invest with BettermentDo you have enough money set aside this year for holiday gifts? Have you been saving throughout the year? Where have you parked that money? Most people simply have the money in a savings account, earning next to no interest.

Next year, you may want to consider investing your holiday funds in a mutual fund, certificate of deposit, or other investment. Those investments will give you a better chance of growing that money than a basic savings account.

Just be careful with the money that you need in a short period of time. Investments could see fluctuations in their price, and your investment could lose money in the short term.

Three months isn’t a long time, but you can also start saving for the holidays and beyond with gift savings account through a reputable investment company such as BettermentInvest with Betterment. Betterment can help you optimize your investment portfolio based on your goals. Open a Betterment account nowInvest with Betterment.

Save the Change

Whether you get cash-back rewards on a credit card or you keep spare change from cash purchases in a jar, put these unexpected funds towards a holiday savings account. There are a lot of unique ways to trick yourself into saving money. Using these interesting ways will help you incrementally grow your balance almost without noticing it.

Get Creative with Gift Giving

Gifts for family and friends shouldn’t push you over your credit limit for the holidays. It’s better to stretch your holiday gift budget rather than frantically trying to save up enough money to please everyone with pricey gifts.

There are plenty of ways to save money on Christmas gifts. You should consider giving “experiences” (e.g., massages, cocktail cruise, concert, etc.) instead of just items, which will be forgotten in a few weeks after the holidays.

You can give experiences as a gift with the help of Groupon or LivingSocial. Another thing that I like to do is to buy discounted gift cards online through a site like It’s also a great place to sell unwanted gift cards too!

You can also buy unique custom art for $5 on And, the list is almost endless if you just get a little creative.

There are better ways of giving a holiday gift than charging it on your credit card. With a little planning and forethought, you can have a great holiday season without going into more debt. You don’t want to start the New Year off by paying for credit card debt on holiday gifts you don’t even remember.

What about you? What are your favorite ways to save for the costs of gifts during the holidays?

Invest with Betterment
Invest with Betterment

How to Spice Up a Financial Gift This Holiday Season

 A recent National Retail Foundation survey found that the average American will spend around $460 on gifts for family members this year, and a lot of this money will probably go towards gift cards or even cash. However, only 27% of Americans would prefer receiving a gift card instead of an actual gift. So, why not spice up your gift-giving this holiday season with something the recipient will truly love?

Financial gifts (such as cash, stocks, and charitable donations) are unlikely to fall out of favor any time soon, particularly with children and teens. Unless you plan on giving away more than $14,000 worth of gifts this holiday season, you likely won’t have to deal with any gift tax issues, especially if your monetary gifts are intended to help someone pay for tuition and/or medical expenses, which are excluded from the tax.

The average American will spend around $460 on gifts for family members this year.Click To Tweet

How to Spice Up Financial Gifts this Holiday Season

To perfect your holiday gift-giving this year, check out some of these ways to spruce up your monetary gifts and not go into debt this Christmas.

Stock & Toy Package

 If your kids are obsessed with Marvel superheroes, Blizzard games, or virtual reality technologies, then instead of just giving them a gift from their favorite franchise or gaming company, why not combine that “fun” toy with stock ownership?

If they’re under 18 years old, they probably won’t appreciate it as much for the time being. But, they’ll be much more grateful in the future when the toy wears out and they still have a stock that’s accruing value.

Once you research a few different companies that show promise for future stock growth, you can purchase stocks on a site like Give a Share and include a gift certificate in their present.

Does Dollar Cost Averaging Really Work?

Santa Scavenger Hunt

If you want to give your kids cash, why not make a game out of it instead of just slipping it in a card? Whether they’re younger kids who love scavenger hunts or teens who love escape rooms, there are plenty of creative ways to send them on a journey around the house to find the jackpot.

Pinterest is a great place to brainstorm scavenger hunt clues, and you can adopt any theme you want, based on your favorite holiday traditions and characters. You might even want to leave small financial rewards along the way to the big treasure for added excitement.

On Christmas morning, with your clues (or Santa’s clues) set up around the house, a scavenger hunt will be much more fun than sitting around opening presents would be. This is particularly useful for families that might be struggling financially this holiday season and can only afford smaller, inexpensive gifts because each clue can come with a quarter and lead up to a bigger prize of your choosing.

Chocolate Box with Cash

The problem with cash gifts is that they’re so predictable. The chocolate box full of cash idea from the Life as Mom blog offers a unique twist on gift-giving. All you need is paper candy liners, a candy box – use an old See’s box or buy one from a craft store – and a mix of coins and dollar bills of varying amounts.

Place a couple of coins or a bill in each candy liner until the box is full. And, wait for the look on the recipient’s face when they open a box that they assumed would have chocolate in it!

Charitable Donations

What better way to give a gift that keeps on giving this winter than by donating to a family member, friend, or colleague’s favorite charitable organization in lieu of a material gift?

Whether they’re passionate about homeless cats and dogs or they want to fund clean water efforts in Africa, you can find the perfect charity to donate to in their name on reputable sites like Charity Navigator. When you make a donation, you will usually receive a certificate that you can give your friend or family member to let them know the good deeds you did in their honor.

27% of Americans would prefer receiving a gift card instead of an actual gift.Click To Tweet

Happy Holiday Giving!

Cash doesn’t need to be a sought-after yet boring gift that only comes in a typical card and envelope. Sometimes, the best financial gifts aren’t even cash, as long-term stock ownership and charitable donations pay off in dividends (monetarily or in goodwill). Get creative with your holiday gift-giving this year and try out one of the ideas mentioned above to delight your kids, friends, and coworkers. And, stay out of debt this Christmas.

Do you need more gift ideas for the financial nerd in your life or are you looking for a gift that’s better than your grandmother’s old Savings Bond, be sure to check out my post for great financial gift ideas for your children on Haven Life.

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

How to Avoid Debt This Christmas

16 thoughts on “Top 7 Ways Not to Go into Debt this Christmas”

  1. 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.

  2. 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.

    • 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.

  3. 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!

  4. 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.

  5. 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. 🙂

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

  7. 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!

  8. 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.

  9. 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.

  10. 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.

  11. 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.

  12. 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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