Fall is finally here, and everywhere I look I see Pinterest-worthy pumpkin carvings, seasonal door hangings, and all kinds of pumpkin-flavored cookies, breads, and pies. Homemade cornstalk creations line doorways and gourds decorate walkways; neighborhood yards are filled with figures resembling ghosts, witches, and goblins.
Even *I* made a homemade pumpkin pie of my own the other day — from a pumpkin straight from my garden. With a recipe from the web up on my laptop, I learned how to clean a pumpkin, prepare it for roasting, whip up a beautiful filling, and make a homemade crust. The kids helped.
Fall is great but…
With fall inspiration everywhere I turn, it's easy to forget about what comes next, i.e., the madness of the holiday season. Good or bad, Christmas is now only 79 days away. Yes, you read that right. That means we all have 79 days to shop for our loved ones and find ways to lessen the financial impact of our purchases — or make the decision to skip the gift-giving tradition altogether.
Even though I hope to experience many gift-free holiday seasons in the future, I currently have two small kids who expect a visit from Santa. That means that, like it or not, I'm on the hook for gifts I'm not even going to get credit for. (Whose idea was this whole Santa thing anyway?) And it's not just that — I'll also need to pony up some cash for gifts for nieces, nephews and friends.
I could feel that sense of panic I get as the holiday season approaches; but this year, I am determined to control my budget. So, instead of whipping up more yummy fall treats, I decided to create my own recipe for a debt-free Christmas instead. Here's how I got started:
Creating a Christmas shopping budget
Before I could look for ways to lessen the impact of the holiday season, I needed to see how much I was going to spend. So, based on gifts from previous years, I came up with a list of people I currently buy for and estimated what their gifts might cost this year.
My Christmas budget:
- Nieces and Nephews: $200 (10 nieces and nephews @ $20 each)
- Parents: $100 (2 sets $50 each)
- Aunt: $25 (1 aunt @ $25)
- Adopted Grandma: $25 (1 adopted Grandma @$25)
- Teacher gift: $25 (gift for my daughter's teacher)
- Daycare gift: $100 (for my daughter's daycare provider)
- Gifts from Santa: $250 ($125 per child)
That figure seems high to me, but it doesn't appear to completely abnormal. After all, last year's Gallup poll showed that Americans planned to spend around $704 for gifts during the 2013 Christmas holiday season. I also have a few more nieces and nephews than most people, which drives up my total holiday spending.
Looking for ways to save
Creating a budget is great, but we all know that a budget means nothing unless you intend to follow it. With that in mind, I've come up with a few ideas that will help me stay on track:
- I'm giving cash. Buying a $20 gift for each of my nieces and nephews is nearly impossible, so I'm giving cash or gift cards instead. Not only will that move ensure fairness, but it will also help me stay right on track with our Christmas spending plan. I also plan to give my daycare provider cash or a gift card instead of a traditional gift because I believe she would prefer it.
- I'm not buying any “hot” gifts. Some of the “hottest” gifts for 2014 are game consoles that run upward of $400 or more. Obviously, that's just not going to happen. Fortunately, my kids are only three and five and not into all of the new technology yet — and I'm going to take advantage of that while I can!
- I'm giving used gifts. I always give my kids used toys and clothes for their birthdays and Christmas, and I'm pretty sure they haven't noticed yet. In fact, I already have a small stash of gently used garage sale items from this summer that I plan to add to their bounty. Is that tacky?
- I'm resisting the urge to give more. My Christmas gift list was a lot longer just a few years ago. Fortunately, I've quit buying for siblings and other family members in the past few years. It was a mutual decision and rather painless on both sides of the family, and I'm thankful for that. With so many kids to buy for, it no longer makes sense to buy for every adult that I'm related to.
- I'm opting out of gift exchanges. We officially opted out of all gift exchanges several years ago, and for good reason. Nothing drives me crazier than being coerced into buying a generic $20 gift (or a few of them) and getting another generic $20 gift in return — all in the name of “fun.” Sorry, wasting $20 isn't fun for me; it's painful. That's why we're no longer participating in adult gift exchanges anymore, although I would consider a gift exchange for the kids.
Strategic holiday gift budgeting
Since we have three months to pay for our holiday shopping, I decided to spread the pain out evenly. With that in mind, I set aside $200 for Christmas in my October zero-sum budget, and I'll do the same in November. In December, I plan to budget for the last $325, which will comprise the cash gifts for the most part.
Even though we have the cash to pay for the gifts outright, I feel like spreading our shopping budget over three months is a good idea. Here's why:
- We won't have to take the money out of savings. One reason I like the idea of spreading our gift-giving over several months is because we will be able to bankroll our purchases as we go. I never want to take money out of savings unless it is entirely necessary.
- I can shop a little bit at a time. I usually just shop a little here and there, so our budgeting strategy will work well with that. This way, I can just do a little bit each month.
- All of our purchases can be paid with cash. I like the idea of paying for all of our Christmas gifts with cash as the months progress. Putting gifts on a credit card for rewards is a good idea too, but only if I have budgeted the money to pay them off right away.
Have yourself a merry, debt-free Christmas
So, there you have it. In the time it took me to whip up a homemade pumpkin pie, I created a recipe for a debt-free Christmas for my family. And now it's time for you to do the same for yours. Are you in?
Start by creating a list of the family members you buy for and estimating how much you might spend on each one. Then look for ways to cut down; consider paring down the number of people you buy for or reducing how much you spend on each gift. Next, think about how to spread your holiday spending over the next three months so that you can start the new year with a clean slate — one that has no holiday debt. It doesn't have to be painful, but you might just decide that having a debt-free Christmas is the best gift you ever give yourself.
How much do you typically spend on Christmas gifts? Have you started budgeting for this year's holiday season?
Author: Holly Johnson
Holly Johnson is a credit card expert, award-winning writer, and mother of two who is obsessed with frugality, budgeting, and travel. In addition to serving as contributing editor for The Simple Dollar and writing for publications such as Bankrate, U.S. News and World Report Travel, and Travel Pulse, Johnson owns Club Thrifty and is the co-author of Zero Down Your Debt: Reclaim Your Income and Build a Life You’ll Love.