How to have a debt-free Christmas each year

How To Have A Debt Free Christmas Every Year

If you want to learn how to have a debt free Christmas, this article is for you. Imagine a Christmas season filled with joy, laughter, and cherished memories, all without the looming shadow of debt.

It’s a dream many of us have, but it’s not as elusive as you might think. In this article, we’re going to share practical steps that can help you have a debt-free Christmas every year.

It’s not about sacrificing the magic of the season; it’s about finding smarter ways to celebrate, share, and create special moments.

So, grab a cup of peppermint cocoa, get cozy, and let’s unwrap the gift of a debt-free holiday season.

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How to have a debt-free Christmas this year

A Debt Free Christmas Is Absolutely Possible


Magical but expensive.

You know what’s crazy, a third of consumers will go into debt to pay for Christmas.

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! 

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1. Trimming the Excess Tinsel

Budgeting Wisely Before you deck the halls, it’s essential to trim the excess tinsel from your holiday budget.

Think of budgeting as carefully pruning a Christmas tree to perfection.

Start by setting a budget that covers gifts, decorations, and festivities.

Be realistic about what you can afford and stick to it. Just like a well-trimmed tree, a well-planned budget can make your holiday season shine.

2. Jingling All the Way: Saving Smartly

Saving money for the holidays is a lot like filling your pockets with jingling coins.

Start early in the year and set aside a small amount regularly. Create a dedicated holiday savings account, and watch it grow over time.

By the time December rolls around, you’ll have a sleigh full of savings to fund your festivities, and you won’t feel like a reindeer in the headlights when the bills arrive.

3. Sleigh-ing the Shopping: Smart Gift Strategies

When it comes to gift shopping, you can slay that debt by being thoughtful and strategic. Instead of splurging on lavish gifts, focus on meaningful presents that warm the heart.

Consider homemade or DIY gifts; they’re like hidden treasures under the Christmas tree, appreciated for their personal touch. Remember, it’s the thought that counts, not the price tag.

4. Mistletoe Magic: Creative Celebrations

To create mistletoe magic without breaking the bank, get creative with your holiday celebrations.

Plan fun and budget-friendly activities like movie nights, game tournaments, or a festive scavenger hunt.

These experiences will create lasting memories, and your loved ones will cherish these moments like a kiss under the mistletoe.

5. Baking Up a Storm: Homemade Holiday Treats

Baking delicious holiday treats is like conjuring up a sweet storm of joy. Instead of buying expensive goodies, bake your own holiday treats as gifts.

Whip up a batch of homemade cookies or craft a jar of layered hot cocoa mix. It’s a heartfelt way to share the holiday spirit without emptying your wallet.

6. Santa’s Little Helpers: Group Gift Giving

Santa doesn’t work alone, and neither should you when it comes to gift-giving. Consider organizing group gifts with friends or family members.

Pooling resources allows you to give more substantial gifts without the hefty price tag. Plus, it’s a great way to bond with loved ones and spread the holiday cheer together.

An Exercise For Planning Your Debt Free Christmas

The following is a step-by-step debt free Christmas blueprint that you can use to save and spend wisely this Holiday season.

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 debt at Christmas ever again!

Step 1 – Determine What Christmas Really Needs To Cost You

It’s time to get realistic here. You cannot change or plan for anything if you do not know the current situation

You may 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 need to know exactly (or as close as possible) how much money you will actually need to pay for Christmas.

Step 2 – Determine A Realistic Holiday Budget

Do you have some 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 3 – Determine How Much Money Needs To Raised To Meet This Goal

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

Therefore, $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 4 – Determine Where Costs Can Be Cut

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 you are crafty at all this can be a great way of cutting costs.
  • Do you have any (new or nearly new) items lying 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 like!
  • Can any gifts be purchased second-hand? Thrift stores, craigslist and eBay can be a great places 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 5 – Increase Your Revenue Streams And Make More Money

Cutting costs and budgeting will only get you so far. It’s always more important to make more money, in general.

Making cash quickly can certainly be done, so check out the list of ideas to help you below.

  • Run an add and promo code to promote your courses, or consulting/coaching services
  • Have a look around the house, there will be a few things you can sell on eBay, Depop or local buy & sell marketplaces.
  • Start up a Christmas-related side hustle. Offer to hang Christmas lights for your neighbors, or other odd jobs. Another idea is you could offer a gift-wrapping service, or even a gift-sourcing service for people in your local community.
  • Would you consider driving for Uber? Think of all the people who need rides to and from parties at Christmas time.
  • If you are staying with family over the holidays consider renting out your home on AirBnB. Many people want to visit friends and family over Christmas and may be looking for a home rather than hotel to stay.
  • If others in your neighborhood are going away for Christmas see if they need some a house sitter. 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.

  • You could also offer pet sitting at your home, while pet parents are away. You could make it Holiday themed and festive where each pet gets a stocking, a present from Santa, and is included in your regular Holiday festivities.

Step 6 – 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.

You need to create a Christmas sinking fund that you pay into every time you receive a paycheck.

But first, what is a sinking fund?

A sinking fund is a savings account dedicated to a specific expense that is upcoming.

Why would I want to create a Christmas sink fund?

Because by the time the Holiday season arrives, you will have enough money to pay for all of Christmas. 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 from spending the money accidentally during day-to-day spending.

Then work out how often you plan to contribute to it throughout the year.

If you own your own business, you likely pay yourself a salary. So just determine how much you want to set aside to the Sinking Fund each month.

For this example, we will assume you pay yourself monthly (12x year).

So, 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 accidentally spend your Christmas saving money.


  • 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 and ready to pay for Christmas.

How To Have A Debt-Free Christmas – Conclusion

And that is how to have a debt-free Christmas and enjoy the season without getting into debt.

As the twinkling lights fade and the carolers bid their goodbyes, you’ll find yourself basking in the true spirit of the season.

By following these simple yet effective tips, you can make every Christmas debt-free and delightful.

Remember, it’s not about the price tag on the presents or the lavish feasts; it’s about the love, togetherness, and cherished moments that make the holidays truly special.

With a little planning, a dash of creativity, and a sprinkle of determination, you can unwrap the gift of a debt-free Christmas year after year.

So, here’s to celebrating the holidays without the financial stress—may your Christmases be merry and bright, now and forever.

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!

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