Finance

Creative Ideas to Avoid Holiday Debt 

By Christian Messemer, The Stewardship Shepherd

 

We are in the last few weeks before Christmas and the mad spending dash has begun. For many Americans, the desire to fill the house with gifts will drain their bank accounts and overheat their credit cards. In 2019 forty-four percent (44%) of consumers used credit to finance a portion of their Christmas spending, borrowing an average of $1,325.[1] I wish there was some magic formula that would allow you to get everything you wanted to please everyone on your list for the price you could afford. Unfortunately, reality does not work like this. For you to survive the holiday shopping season with your budget intact you need to create one, learn to stretch it, and look for opportunities to increase it. 

1. Set the Budget

It is important to begin by setting a firm budget for gifts. A budget contains two key components: a way to track every expense and a max number or threshold, over which you will not go. Without either of these, whatever you are using is not a budget. When tracking expenses, go paper or digital. Paper entails keeping receipts and tallying your expenses after each purchase. Going digital allows you to categorize an expense as “gifts” in real time. The method you use for tracking does not matter, but your follow through does. Regarding your max, at this point in the year, you either have money socked away for gifts, or you do not. If you do, the amount you have allocated specifically for gifts is your budgeted maximum amount. If that envelope is empty, and you desire to avoid entering the 2021 with debts to repay, you are limited in what you can do, but do not count yourself out yet. This article tackles how to creatively stretch and increase your gift budget.

2. Stretch the Budget

Let’s begin by accomplishing more with less. When you learn to stretch your budget, should you find extra cash, you will be more efficient in how you spend it. Stretching the budget is unconventional in that you do not need to buy something new from the store. If you can get over this mental hurdle, buying gently used items or making your own are fantastic solutions if you are working with a limited budget.

The belief that all presents must be brand new in the box causes financial stress every year. Today, everyone is looking for a good deal, and the best deals around are found by buying items for which someone else paid full price. If you have younger children, buying popular toys like Legos, Imaginext, Paw Patrol, or Transformers through Good Will, consignment shops, eBay, or Face Book Marketplace are great ways to find in demand toys while saving money. If you are worried about not having a new box for your little ones to open, avoid wrapping, and build a display or scene like they used to create in the stores. When your kids come into the living room, they will be so surprised, the last thing on their mind will be the box. Toys aren’t the only items you can find; cooking and baking items are great too. One of my favorite kitchen gadgets, an old-school veggie pasta slicer, was a gift found at local thrift shop. I have also had a few friends find barely used KitchenAid mixers and all the attachments for under $100. Move past the stigma that gently used is beneath you and find some deals you can afford. 

 

A second option is to take advantage of your skills to create gifts for your loved ones. While this is not my skillset, my wife and daughter have been blessed with creative ability. Instead of the traditional Christmas gifts, this year my wife decided to do something incredibly special for the family. Years ago, during a trip to visit her grandmother, we spent time learning how to make each one of the Christmas cookies her family grew up loving. This year, she made six different cookies and packed them in a festive tin. At a time where families are not gathering for Christmas, these cookies will taste like home and be appreciated far more than any gift she could have found at the store. Perhaps baking is not your forte. What do you do well? Is there something do or talent you have that people compliment and love? You may be a creative (drawing, painting, photography, writer) or a craftsman (wood, metal, jewelry). A hobby you enjoy in your spare time, might be a great gift opportunity. 

If you are a creative and other creatives admire your work, you have another opportunity: trade.[1] For an investment of your time and the cost of your product or service, you can trade your creations for theirs. This keeps costs low, while expanding the gift pool. Even better, many of the creatives I know enjoy trading (in moderation) since there is no income tax liability. 

Buying used, making your own, and trading are a great way to stretch your holiday budget, but sometimes you need to find a way to make the pie a little bigger so you can take care of everyone on your list. Next, I discuss four ways to increase your budget.

 

3. Increase the Budget

If stretching your budget does not quite get the job done, you need an infusion of cash. The obvious solutions for increasing your income are to get another job and sell stuff you no longer need or use. However, if you are reading this article, you are looking for something beyond these conventional suggestions. Lucky for you, I have a few more: cut your December (or future) budget, check your gift card balances, leverage cash back opportunities, and release your inner entrepreneur.

 

Start by cutting your December budget. What areas of your budget could you permanently cut or temporarily reduce to free-up funds? Permanent cuts focus on canceling future services, which help your budget long-term. Temporary reductions last only for the month of December. Both cuts and reductions will free up cash for holiday shopping. The fastest place to look for savings is to examine your monthly subscriptions and decide if can permanently or temporarily live without them. Gym memberships, cell phone plans, subscription services (Amazon, Netflix, YouTube TV, Cable) could be great options to cut or reduce. Next, could you eliminate eating out, grooming (hair or nails), entertainment, or clothing purchases for the month of December and reallocate these funds to gifts? According to the Bureau of Labor Statistics, the average 

consumer spends almost $3,500 per year going out to eat.[1] If this sounds like you, cutting just this category for the month of December would free up close to $300. A final thought is to clean out the pantry and freezer and avoid going to the grocery store. It may take some creative meal prep, but a dollar saved is a dollar available. 

Next, check the balance of your gift cards. I was surprised to see that the average American has $167 in unused gift card balances.[2] I found that statistic unbelievable. So, I checked our junk drawer for forgotten cards and searched “gift card” in my e-mails. While the drawer was empty, my search found a few e-cards. I thought we were good at using the cards as they come in, so imagine my shock when I discovered we had $75 available to use at Best Buy ($25) and Williams Sonoma ($50). While still below the $167 average, if funds were tight, having an extra $75 for gifts would help. 

Another way to increase your budget is to take advantage of cash back opportunities. I am not talking about cash back rewards from a credit card. Rather, I mean store cash earned at the time of purchase. There are a few stores (Kohls, Macys, and Belk) that use cash back rewards. I am most familiar with Kohls since we frequent the store. Depending on the time of year, you can earn $10 or $15 in Kohls Cash for every $50 you spend. That is 20% or more of your total purchase. If you time your spending exactly right you can purchase some gifts on your list, earn the cash back, and finish your shopping a few days before Christmas. Combine the cash back rewards with the 15%, 20%, or 30%, as well as points for every dollar spent that convert to in store cash at the end of every month and the savings adds up quickly. 

If your budget needs more than cuts and leveraging gift cards and store cash, it is time to release your inner entrepreneur. What skills do you have for which people are willing to pay? Are you known for your baking or cooking? Offer your friends and coworkers desserts or a meal menu this season. Desserts are not only great treats for the family, but they make great gifts too. Are you a skilled artist or photographer? Draw, paint, or photograph individuals or families for Christmas. Are you a craftsman with a woodshop full of tools and head full of ideas? Take advantage of the demand for your skills. There is no time like the present to see if your hobby could turn into something more. 

4. Community Assistance 

For some of you reading holiday budgeting is not enough. Your struggle is a resource problem. You work hard, budget well, and save where you can, but necessary expenses little available for gifts this Christmas.  If this is you, I urge you to take advantage of the many organizations who want to help you this holiday season. If you are not aware of the assistance provided in your area here are some places to start. First, reach out to the public schools in your area. Local organizations often contact schools to let them know the services they provide. It is not uncommon for schools to create resource lists. Next, contact local churches and ministries in your area. The church we attend in Texas has an outreach program, which, in conjunction with other churches, is providing meals and gifts to over 1,000 families in the area. I am aware of numerous other programs sponsored by churches of all denominations throughout the city. Finally, reach out to your local city government, specifically the police and fire departments. These government servants are the face of the city during many individuals’ worst day and are aware of the many organizations that help people rebuild, find food and shelter, and obtain professional help.

Recap

2020 has been a tough year for many of us but attempting to make it better through excessive spending this holiday may provide a temporary respite, but it will also guarantee you start 2021 in the red. If you want to avoid climbing out of holiday debt in 2021 you need to follow an unconventional path. First, set a budget and stick to it. Have a way to track expenses and a firm maximum. Second, creatively stretch your budget. Gently used items may not come with a box, but they fit your need and the budget. If you have a skill like baking, preserves, or crafting, use it. Third, seek opportunities to increase your budget. Look for part-time work, sell stuff, trim the budget, look for unused gift cards, and take advantage of store cash opportunities. Moreover, if you are already baking, making, or crafting, see if your coworkers are interested in buying. You might to more than earn money for Christmas, you may find a side-hustle that pays for Christmas next year. Finally, some individuals need more than budgets and creative ideas, they need a helping hand. If that is you, please reach out for assistance. There is not a person alive who has not benefitted from the kindness of others. This season be a beneficiary; next year, be a sponsor.

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