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Christmas is expensive.
Magical but expensive.
You know what’s crazy, 1 in 3 consumers will go into debt to pay for Christmas in the UK. And I would guess it’s a similar number for you guys in the USA.
So what can you do to ensure you’re not one of those people?
Or is Christmas debt just an inevitable fact of life?
(That’s a big, fat, huge, NO)
You do not need to get in debt to have an amazing, magical Christmas and today I’m going to tell you how!
First you have to figure out your Christmas financial situation, then you can implement some of the super easy action tips below to remove that Christmas money worry and debt!
But seriously don’t skip step six because it’s the most important. Step six is the one that’s going to stop you ever getting into the debt at Christmas ever again!
Step One – You need to figure out much Christmas REALLY costs you
It’s time to get realistic here. You cannot change or plan for anything if you do not know the current situation
You need to go through old bank statements, receipts, anything you have relating to you spending money for Christmas. Make sure you count all the spending whether it’s on presents, food, experiences etc.
You really need to know exactly (or as close as possible) how much money you really need to pay for Christmas.
Step Two – Assess how much money you have available for this Christmas
Have you got any money saved for Christmas already?
Perhaps you’ve already purchased a few presents or have brought some long lasting food?
Don’t worry if you literally have nothing saved for Christmas yet. We will get you sorted!
If you have no Christmas savings how would you normally pay for Christmas? On December’s paycheck? On credit cards?
Figure out how much cash (not credit card space!!!) you will have available for Christmas. If you already have a budget set up this should be quite easy, if not you can learn how to set one up today and sort not only your Christmas finances but also your life finances!
You should now know:
(A) How much Christmas normally costs you
(B) How much you already have saved for Christmas (in both cash and goods)
(C) How much cash you will have available for Christmas (spare money from future paychecks etc)
Make sure you have these three things written down for the next step.
Step Three – Now we will work out how much money you need to raise or cut so you don’t have to get into debt this Christmas
Add (B) how much cash you already have saved and (C) how much cash you will have available. Then minus them from (A) how much Christmas normally costs you. This will tell you how much money you need to raise or cut so you don’t have to get into debt this Christmas.
A – (B + C) = How much money you need to raise or cut so you don’t have to get into debt this Christmas
Mimi has $300 dollars saved up for Christmas already and she will put $300 from her November paycheck and $350 from her December paycheck towards Christmas. She’s worked out that Christmas normally costs her $1,500 each year.
A = $1,500
B = $300
C = $300 + $350 = $650
$1,500 (A) – ($300 (B) + $650 (C)) = $550
Mimi needs to raise or cut $550 to pay for her Christmas with cash rather than getting into debt!
Step Four – How can costs be reduced
It’s always best to assess how costs can be reduced before we look at ways to make extra money. In some cases you may not even need to make extra money once costs have been reduced!
- Are you in the habit of buying presents for the sake of buying presents? Ensure each gift you give is given because you genuinely think the person will enjoy it and not just because you feel like you need to give them a certain number of presents.
- Do you normally have left over food at Christmas? If so you need to cut down on how much food you buy and serve. Try creating a meal plan and using recipes to ensure you only buy what you actually need.
- Are you spending money on anything Christmas related to ‘keep up with the Jones’ rather than for true enjoyment? If so cut that out now, not only will you save money but Christmas will actually be more enjoyable because you are only spending money and doing things that bring joy.
- Do you send Christmas cards to people you haven’t actually spoken to in years? The costs of cards and postage can really add up. Instead you could send free ecards over email. Or make this the last year you send cards to those people, just make sure you tell them nicely in this year’s card that you won’t be sending next year. Feel free to tell them you are trying to save money and I’m sure many people will relate and understand.
- Do you partake in any gift giving that’s inauthentic and you are only giving gifts because of societal expectation, such as work gifts or to your children’s friend’s parents? I know it feels awkward but try and explain that you need to save money on Christmas this year so you are unable to partake. You will probably find that many others feel the same and will feel relieved that they also don’t have to spend the money.
- Can you DIY any gifts? Something handmade is always received well because it shows you have put the time in to make something for that person. If your crafty at all this can be a great way of cutting costs.
- Do you have any (new or nearly new) items laying around the house that you don’t want and could be re-gifted to someone else to enjoy? This can be especially great with kid’s toys. There is absolutely nothing wrong with re-gifting as long as you are giving someone something they will actually like!
- Can any gifts be purchased second hand? Thrift stores, craigslist and eBay can be a great place to find gifts for people, especially if they like designer brands as you can often find items in amazing condition for much cheaper than buying new.
Step Five – Make any additional money you need to pay for Christmas in cash
If you are still short on cash to pay for Christmas, even once costs have been reduced, it’s now time to make some money! Making cash quickly can definitely be done, so check out the list of ideas to help you below.
- Can you take on any extra shifts at work?
- Many companies require casual staff over the holidays so could you get a second job? Think places like postal companies, shops, restaurants, bars, Christmas events…
- Have a look around the house, there will definitely be a few things you can sell on eBay or craigslist.
- Start up your own Christmas related side hustle. One idea is you could offer a gift wrapping service, or even a gift sourcing service for people in your local community.
- Try something like Uber as people go to loads of parties at Christmas time so taxis are always required.
- If your staying with family over the holidays consider renting out your home on somewhere like AirBnB. Many people want to visit friends and family over Christmas and may be looking for a cheap place to stay.
- If others in your neighborhood are going away for Christmas see if they need some sort of house sitter or someone to care for their pet while they are away. It may only take you 20 minutes each day to go check their house is still in order but could make you those few extra dollars you need to pay for Christmas.
Step Six – Start planning for next Christmas
This is the most important step and it’s the one step that will mean you never get into debt at Christmas again!
It is advised that you already have a budget set up, but you can still do this step without a budget.
Basically you need to create a Christmas sink fund that you pay into every time you receive a pay check.
But first, what is a sink fund?
Sometimes called sinking funds, sinks funds are mini savings pots that you add to each time you’re paid to cover things that are not regular costs.
Why would I want to create a Christmas sink fund?
Because by the time Christmas arrived you will have enough money to pay for all of Christmas sat in a nice little pot waiting for you. No stress, no panic. Leaving you more time to have actual Christmas fun.
How do I create a Christmas sink fund?
First you want to open an easy access savings account with your bank. It’s important to use a separate account because this stops you spending the money accidently during day to day spending.
Then work out how many times per year you get paid. So if you are paid monthly, you’re paid 12 times per year.
Then grab your figure (A) from earlier about how much Christmas costs you each year and divide it by twelve.
This is the amount of money you will pay into that savings account every time you get paid, on the day you’re paid.
It’s important to do it on the day you get paid so that you don’t accidently spend your Christmas saving money.
As it costs Mimi $1,500 to pay for Christmas each year and she is paid at the beginning of each month. She worked out that $1,500 divided by 12 is $125. Therefore on the day she gets paid every month she will transfer $125 into her new easy access savings account. By the time December rolls around she will have that $1,500 saved up ready to pay for Christmas.
And that is how to pay for Christmas without getting into debt? What do you think? Did you find this post helpful? Tell me in the comments below and remember to pin it for later if the post helped you!