How To Budget For Christmas When You’re In Debt

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Do you want to make the most of the Christmas season even though you’re in debt? If so, you’re in the right place. I’m going to show you how to budget for Christmas when you’re in debt.

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Christmas is a joyous time. We get to spend time with our family members, attend parties, and just have a good time. 

Although it can be a lot of fun, it can prove to be stressful if you’re already in debt and don’t have a Christmas budget. 

When I started my debt-free journey in 2014, I had no clue how to budget for Christmas. 

I was very strict with my money and felt like I shouldn’t spend money on Christmas because of the amount of debt that I had.

Then my husband got sick in September of 2015 and required several surgeries, which added on even more debt to our total amount. 

Being set back while trying to be responsible and pay off debt made me realize two things. 

The first one is that if something can happen, it will. Life doesn’t stop being hard just because you’re on a debt-free journey.

Things will still happen to you and around you no matter what your current journey happens to be. 

The second thing is that life is short. Yes, I want to become debt-free, but I also want to enjoy every aspect of my life along the way.

I did not enjoy Christmas in 2014, but I have thoroughly enjoyed myself every Christmas since then without taking on any new debt

Now, I want to show you how to do the same. Before we get started, let’s talk about overspending.

Christmas gift

How to avoid overspending for Christmas

There are so many expenses that come with this season in addition to regular monthly bills. Extra costs make it so easy to overspend. 

The key is to recognize overspending for what it is and avoid it. Here are a few common ways people overspend during Christmas and how to avoid them.

Buying too many gifts

One of the main reasons that people tend to overspend for Christmas is buying gifts for too many people. 

Christmas season is all about giving, and often, we feel like we need to give gifts to everybody in our lives. 

Giving gifts to everyone sounds like a good idea in theory, but when you’re in debt, you have to be realistic. It’s ok to cut down your gift-giving to a few people until you are debt-free. 

Paying attention to advertisements 

Let’s face it; ads today make you feel like you need to purchase absolutely everything.

Sales ads start rolling in a few weeks before Thanksgiving and don’t end until after Christmas. 

That is a long time to see new items flashing across your screen, screaming your name. 

During this Christmas season, try not to pay attention to the advertisements. Create your gift list and only purchase things on that list.

Your budget will thank you after the holidays.

Holiday Travel

I mentioned earlier that Christmas is about spending time with your family and friends. Spending time with people can be difficult if your family and friends live far away.

Flights, hotels, and even Uber prices tend to be much higher during peak holiday seasons. 

If you must travel, purchase your tickets and make your reservations early. Also, search for discount codes and try to be flexible with your travel dates and times to save a bit of money.


Christmas time is full of activities. There are work parties, potlucks, and gatherings with family and friends, just to name a few. 

Bringing a dish or a gift for each can add up pretty quickly, and this doesn’t even take into account Christmas plays and things that require tickets.

The best way to handle events is to make a decision on which events you will be attending and say no to the ones that you can’t afford. 

It may be hard to say no to invitations, but your family and friends will understand.

Not factoring in all expenses

Holidays come with unexpected expenses in addition to things that we often forget to add to our budget. 

When planning for your events, outings, and travel, there are a few things we tend to forget. 

Tips for servers and Uber drivers, fees associated with events or travel, and gift wrap are all things we don’t usually think about when creating a budget. 

Create a line item in your budget for tipping and additional fees to be sure you have enough money to cover all expenses without going further into debt.

How to budget for Christmas when you’re in debt

Now that we have addressed overspending, it’s time to talk about how to tackle a budget for Christmas while you’re in debt.

The first step is to create a regular monthly budget. Your monthly budget still needs to be in place during the Christmas holidays because we don’t want to miss any deadlines or payments.

Budget as you usually would and cover all upcoming expenses and debt payments. 

When everything is covered, add a category to your budget for Christmas and put any remaining money there. The remaining money is what we will be working with for your Christmas budget.

Download our free Debt-Free Christmas Workbook, and let’s get started.

Write out your plans for Christmas this year. Include all travel, party, food, and events you plan to attend.

Next, add important dates to your calendar and make notes if necessary. 

The last and most important thing is to create your budget for Christmas. Write the amount of money you have available at the top, and budget until you allocate all money.

There are two essential things to remember when setting up your budget for Christmas.

1. Create a Christmas gift list

Being that you are using a budget for Christmas this year, you want to have a set gift list. Although it would be awesome to purchase gifts for everyone you know, it’s not wise to do so while you’re in debt.

You have to decide how many gifts you can purchase with the amount of money that you have set aside for presents.

Create a list of people to purchase gifts for and the amount you plan to spend on each person. Use this list when you’re shopping and stick to it.

It is hard when you can’t purchase gifts for everyone. Trust me, I know. Not being able to buy gifts should motivate you to get out of debt, so you have the means to give freely.

2. Track your expenses

You should treat your Christmas budget just like you would your regular budget and track expenses. 

Tracking expenses will help you stay on top of what you’re buying and how much money you have left.

Every time you make a purchase, track the expense, and subtract it from your budget. Keep track of your receipts as well in case you need to make a return, or something doesn’t work the way it should. 

If you have trouble tracking your expenses, try shopping with cash or gift cards. Take only the amount of money that you plan to spend in the store with you. 

When you have spent all the money, it is time to go home.

Writing in a notebook

What if there is no money for Christmas?

It can be very depressing if you don’t have any money for Christmas, but you will survive. Focus on living in the moment and spending time with family or even yourself.

There are plenty of free events to attend during the holiday season and lots of ways to make this time special without spending any money.

Make sure to take some time to plan for the Christmas you want next year.

You can get a head start on this by opening a Christmas bank account. Separate accounts are great for saving money. 

Most credit unions will allow you to open a Christmas account with $5 if you bank there. In October, they transfer the money to your regular account for holiday spending.

Decide on a set amount of money you can contribute to your Christmas account each month and set up auto-draft starting in January. 

I contribute $20 per paycheck to my Christmas fund, and I have plenty of money in December to do everything I want to do for Christmas.

Another way is to bring in more income by getting a side hustle. 

One of my favorite side hustles is being a Virtual Assistant. Other options include driving for Uber, blogging, and delivering food for companies like Door Dash.

Whatever you choose, make sure the startup cost is low, and it’s something you enjoy.

The bottom line

Christmas time is great for spending time with family as well as giving and helping people. 

There is no way you will be able to relax and enjoy these things while you’re stressed about your finances. 

Believe it or not, the people that are around you during this time can tell when you’re stressed. 

Create your Christmas budget and stick to it no matter what. Download the free Debt-Free Christmas Workbook to get started right away.

When January comes, you will realize that you are a step closer to debt freedom because you didn’t put Christmas on a credit card.

Comment below and let me know your biggest Christmas budget struggle.

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