How to Avoid the Debt Trap This Christmas


You don’t have to go bankrupt to have a nice holiday.

Photo by Hert Niks on Unsplash

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“The season’s upon us. It’s that time of year. Brandy and eggnog, there’s plenty of cheer.” — Dropkick Murphys.

Black Friday is fast approaching, soon to be followed by Small Business Saturday and Cyber Monday — one long weekend of Christmas sales to kick off your holiday season.

Money is tight for many people, especially this year, but just like every holiday season, there still will be pressure to spend, spend, spend. Buying gifts can really take a bite out of the wallet, especially if you have many people to shop for.

Make it a goal to not go into debt this holiday.

It’s tempting, especially after such a horrible year, to want to do something special for the people you love. Don’t let yourself be pulled into gift-giving competitions with people or succumb to retail marketing practices that entice you to spend more money than you can afford. And whatever you do, avoid the siren song of credit cards and “special offers.” There are other ways to show your love. It’s cliche, but with gift-giving, it’s the thought that counts.


Here are some ways you can have a nice holiday without paying for it for months — or years — to come.

1. Set a spending limit — and stick to it

Before anyone swipes a credit card, talk to your family and friends who you usually exchange gifts with. Let them know that you are trying to keep both them and yourself from overspending, and suggest a limit that works with your holiday budget. You can buy a perfectly nice gift for $50 or even $25.

2. Do a name exchange

Use your Thanksgiving dinner as an opportunity to put everyone’s name in a bowl and have everyone pick the name of one adult to buy for. This way, instead of buying two gifts for your parents, two for your sisters, two for your brothers-in-law, you can just buy one nicer gift. You may want to exclude the kids from the drawing. No kid wants to end up with one measly present.

3. Shop with your debit card, not your credit card

My grandmother always used to say if you can’t afford it, you don’t need it. The same goes for gifts. If you use your debit card for your Christmas shopping, you’ll avoid the overspending that happens when you use a credit card. Delayed gratification is great, but delayed payments — with interest — are killer. That $200 you charged may cost you $250 or more by the time you pay it off.

4. Don’t give into the “pay nothing now” temptation

This time of the year, you’ll see a lot of “pay nothing for 90 days” or “no payments until 2022” offers. They sound good, but as they say, the devil’s in the details. You’re generally going to be accruing interest charges during the “no payments due” time period, and it will be added to your balance when your payments start. You may end up paying 50% or more over your original purchase if you don’t pay the balance in full during the grace period.

5. Give experiences, not objects

The best gift I ever got was on my 50th birthday when my siblings presented me with a box full of fifty slips of paper. On each slip of paper, they had written one thing they loved or appreciated about me. Several years later, I still look at those slips, long after any other gifts were forgotten, and get a little teary. Think of what would make someone happy to experience and give them that. Make them dinner, mow their lawn, go for a hike with them, plan a “pajama and movie marathon night,” or steal my siblings’ idea and tell someone how much you appreciate them.

6. Use accrued rewards points or gift cards

If you’ve got reward points saved up, use them to give someone you love a Christmas gift. Use airline points to upgrade their flight or get them a weekend at a nice hotel. Use reward points at the stores or unused gift cards to purchase something special without spending a dime.

7. Make your gifts yourself

Even if you don’t think you’re creative, you can still find a way to make something that’s Christmas present worthy. Bake cookies or make fudge. Make some jarred pickles or homemade Kahlua. Knit a scarf. Make a picture collage and put it in a nice frame. Write a poem. Make a terrarium or candles, or try your hand at macrame. There’s something you can make, I guarantee it.

8. Re-gift

The chances are good that you have something you’ve received as a gift that just isn’t right for you — but someone else might love. Do you still have that ice cream machine unopened in your closet? Pass it on. Is that sweater your mom gave you last year a little too snug? Think about how nice it would look on your friend. Just make sure you don’t re-gift to the same person who gave you the item in the first place — unless it’s a fruitcake.

9. Comparison shop

Black Friday is horrible, but it’s also a time to get good deals. You can also get good deals by shopping early and comparing prices. An item might be on sale or significantly less expensive at one store than another. It’s worth your time to avoid buying your gifts at the first price you see. Don’t forget to check outlet stores and thrift stores.

10. Earn some extra money for gift buying

Increase your gift-buying budget by looking for ways to increase your available money. Get a seasonal job, preferably in retail, where you will also get store discounts. Use local groups like Nextdoor or Facebook Marketplace to sell some of the things you have laying around your house catching dust. Cash in that jar of change sitting on your dresser. Pick up some odd jobs for cash.


With some careful planning, creative thinking, and a lot of self-restraint, you can give gifts that you are proud of and will mean a lot to the people you love. Now put away that credit card and get planning!

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This article is for informational purposes only. It should not be considered Financial or Legal Advice. Consult a financial professional before making any major financial decisions.

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