Avoid the Debt Trap: Smart Holiday Spending

Blog | November 16th, 2023

Alright, fellow spenders, let’s talk business—no, not the kind you might be buying for your holiday feast—but about the urge to splurge during the festive season. 

Who can resist the dazzling sales and the heart-tugging commercials? 

But there’s a line between festive generosity and ringing in the New Year with a debt hangover. Let’s dive into some savvy strategies to enjoy holiday shopping without the financial stress.

1. Create (and Stick to!) a Budget

I know, I know, “budgeting” might as well be a four-letter word. But trust me on this: knowing how much you can spend—and sticking to it—is the first line of defense against overspending. 

Tip: Consider the 50/30/20 rule. Allocate 50% of your budget to necessities, 30% to wants, and 20% to savings or paying off debt. During the holidays, this rule can keep your gift and entertainment expenses (those “wants”) in check.

2. Use Credit Wisely

Those shiny plastic cards can sometimes feel like a free ticket to Wonderland. But remember, every dollar you put on credit needs to be paid back— sometimes with interest!

Tip: Limit your holiday shopping to one credit card. It’s easier to track, and if you’ve chosen a card with a lower interest rate or great rewards, it could benefit you in the long run.

3. Leverage Credit Card Rewards

Speaking of rewards, are you making the most of your credit card perks? Many cards offer cash back, miles, or points that can be redeemed for gifts or travel.

Tip: Plan and save up your rewards throughout the year. When the holidays roll around, use those points for gifts or even as a treat for yourself.

4. Consider the “Gifts of Time”

Not every present requires a price tag. Sometimes, the most cherished gifts are those that come from the heart. Think about offering your time or skills as a present. Whether babysitting, helping with home repairs, or simply spending quality time together, these can be more meaningful than anything store-bought.

Tip: Create personalized “gift certificates” for your offers, making them tangible and special.

5. Shop with a List (and Check It Twice!)

It’s easy to get carried away, especially when every store screams “SALE.” By creating a list of who you’re shopping for and setting a specific budget for each person, you’re less likely to make impulsive purchases.

Tip: Take your list with you (or have it on your phone) and stick to it. If it’s not on the list, it doesn’t go in the cart!

6. Take Advantage of Sales—but Be Cautious

Black Friday, Cyber Monday, pre-holiday sales—the deals are seemingly endless. While these can offer genuine savings, don’t get lured into buying things you don’t need just because they’re discounted.

Tip: Set price alerts for specific items you’re interested in. Tools like Honey can help you snag a deal when the price drops.

7. Avoid Store Credit Card Temptations

Yes, that 20% off when you open a store card sounds tempting, but these cards often come with high-interest rates. If you’re not planning to pay off the balance immediately, the interest might cost more than any discount you received.

Tip: If you do opt for a store card, make it a rule to pay off the balance in full each month.

8. Embrace DIY

A homemade gift, be it cookies, a knitted scarf, or even a hand-painted card, often holds more sentimental value. It shows you’ve invested time and effort, and it can be easier on the wallet.

Tip: Pinterest is your friend here. Dive into the plethora of DIY gift ideas available.

9. Plan for Next Year

Think about starting a holiday savings account. Deposit a small amount each month, and by the time the next holiday season rolls around, you’ll have a fund ready to dip into without touching your regular savings or going into debt.

Tip: Some banks offer Christmas or holiday club accounts designed for this purpose.

10. Leverage Cash Back and Discounts

One of the smartest ways to get the most out of your credit cards is by maximizing cash-back offers and discounts. Many credit cards offer a percentage of cash back on purchases in specific categories, especially during the holiday season. If you’re planning to make a big purchase, why not use a card that offers a significant cash-back percentage?

Tip: Regularly check your credit card’s rewards portal or app for limited-time offers, especially during the holiday season.


In the end, the magic of the holidays isn’t found in extravagant gifts or big spending sprees. It’s in the moments we share, the memories we make, and the love we give. 

By approaching the season with a clear plan and mindful spending, you can ensure that the only thing you’re left with in the New Year is happiness and warm memories, not a pile of bills. Cheers to smart spending and even smarter celebrating!

Related: Start Your Holiday Savings Budget Now, Here’s How To Plan For End-of-Year Celebrations!