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The holiday season is here? When the word holiday comes to mind what do you think of?
For me, I think of hot chocolate, egg nog, Christmas carols, the smell of live Christmas trees, shopping, opening gifts and being left in whole lotta debt!
Yes, I said it. Did you know that Americans love to shop?
According to MarketWatch.com, in 2007 American shoppers incurred $1,054 of debt during the Christmas season. 44% of shoppers racked up more than $1,000 in holiday debt, and 5% accumulated more than $5,000 in debt.
My Personal Encounter with Holiday Debt
Ending the holiday season in debt is rough.
A few years ago, the Christmas spirit bit me and I decided to be overly generous. In fact, I must have channeled in my inner Oprah because I decided to purchase gifts for everyone. Anyone remember the car giveaway episode? Instead of saying you get a car, it was more of you get a gift. LOL.
Y’all, I completely lost my mind!
My mind wasn’t gone for long. When the credit card statement arrived in the mail, all of the sense that I lost, came back with a vengeance.
This should not have happened!
I never expected to spend this much money during the holiday season.
Recovering from excessive holiday purchases will take some time. Especially if you do not have money available to cover those charges. I was not in a place where I could repay my debt within 3 to 5 months. Quite frankly, it took me well over a year to pay off those debts.
If you’re not careful, excessive holiday spending can lead to excessive holiday debt. In this blog post, I will share three simple steps that you can take to have a debt-free holiday season.
1. Start Saving Early
It’s never too early to start saving for the holidays. In fact, saving early makes things that much easier.
Set SMART Goals
In order to start saving early, you need to set a SMART goal.
Determine how much money you can afford to save.
S = Specific – Be specific! What you want to accomplish, why it’s important and how you will achieve it. The more specific you are with your goal, the better chance you have at achieving it.
- I want to avoid overspending during the upcoming holiday season by creating a savings plan and sticking to it.
M = Measurable
How much money are you trying to save?
- I want to save $700.00 in 7 months for the holiday season.
A = Achievable
Can you accomplish this goal? Is the timeline realistic and in line with my current financial situation?
- I will save $100.00 a month for 7 months. That’s $50.00 a paycheck.
R = Realistic
Set a realistic goal that you can easily accomplish. Don’t go overboard by setting a goal that’s difficult to attain.
- Saving money early eliminates stress and it builds your confidence.
T = Time-Based
What is your deadline?
- I want to have the money saved Black Friday Weekend.
That’s it! Easy right?
Do you remember learning about SMART goals in school? Apply those same methods when setting financial goals.
These are the SMART goal that I set for myself a few years ago. When I accomplished my goal – I was ecstatic! I set my mind to something and I achieved it. In fact, I found myself wondering why I haven’t done this a long time ago.
I encourage you to start saving early and set a SMART financial goal.
FREE Holiday Budget Worksheets
Get a jump start to your holiday planning with these FREE holiday budget worksheets. Sign up below to receive the budget worksheets and the holiday saving challenge worksheet as a bonus.
2. Create a Holiday Budget
After you create a savings plan, create a holiday budget. Plan out your holiday expenses. By breaking down your anticipated expenses, you can easily determine your potential budget categories.
For instance:
- Entertainment – Are you planning to attend any parties?
- Clothing – Attending a themed party? Need to wear a specific color?
- Food & Beverage – Are you cooking a meal or Have you been asked to bring food & or beverages to any events?
- Gifts – Do you plan on purchasing gifts for anyone? Family, Friends or Co-workers?
- Miscellaneous – Items that may randomly arise. Ex. Gift wrap, tape, postage, etc.
Be as detailed and be realistic! These are two fundamentals that will greatly assist you as you construct your holiday budget.
Also, it helps if you rank each category by priority. Determine which categories are your biggest priority and which ones aren’t. Make your list and check it twice.
Commit to a savings plan. By doing this you already know how much money you’re working with. Ultimately, it is up to you to decide if you want to stay in budget or exceed it.
If you’re willing to do the work, you might as well stick with it. I can guarantee you that it will pay off in the long run.
Check out my post – how to enjoy the holidays on a budget!
3. Track Your Progress & Stay in Budget
Spend the money and track your progress!
A holiday budget serves the same purpose as a general day-to-day budget. It’s important for you to track your spending to make sure you don’t go over budget. In order to be debt free, you have to stick to a strict budget. You cannot go over budget.
As you prepare to shop, be sure to:
- Spend Money – Determine if you’re going to carry cash or if you’re going to use your DEBIT card. Do not use your credit card!
- Track Your Progress – As you complete your purchases, keep a running total of how much money you’ve spent. Tracking your expenses allows you to see WHERE your money is going. You can see first-hand if you’ve overspent in a certain category or not. As you track your expenses, make sure that you are hitting your budget categories.
- Stay in Budget – If it exceeds your budget – PUT IT BACK! Do not reconfigure your budget in the store.
You have to learn how to say no! This is very important. As you track your expenses, make sure that you are hitting your budget categories. If you notice you’re picking up items for yourself STOP! You do not have a line item for you. Remember the holidays are about giving.
I don’t want you to have any encounters with buyers remorse this holiday season.
Being in debt is not a great feeling. I want you to succeed!
I hope this article provided you with some insight into how to have a debt-free holiday season. If you have any tips or tricks, share them with me in the comments below. I’d love to hear about them.
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