How to Handle Holiday Gift Giving While Paying Down Debt

When I was a kid, I loved everything about Christmas. As a teen, I relished giving my family presents bought with earnings from my first job. Then I moved away and got my own place, and most of my money went toward rent, utilities, and car payments.

Over the years, I began to dread the holidays, since the season meant that I’d spend money I didn’t have. Then I got a credit card or two, and soon, I was back to rockin’ around the Christmas tree.

Fueled by Christmas music and a perfume counter high, I used my first retail credit cards to buy my family expensive sweaters, plush bath robes, appliances, and anything else I fancied. Finally, I enjoyed the holidays again.

Until I received my credit card bills the next month.

I owed $1,000 – a huge chunk of my salary back then, and at high interest rates. It took me years to pay that debt, with numerous late payments that crippled my credit. I improved my credit, but never forgot the lesson.

Eventually, I spoke frankly with friends and family about giving holiday gifts I couldn’t afford. Now the holidays are simpler and less expensive for me and my friends – and they can be for you too, at least while you’re paying down debt.

Signs You Can’t Afford Christmas

• You don’t have a holiday budget
• Your expenses exceed your income
• You have zero savings in the bank
• You don’t have a stable income
• You need to use credit to buy gifts
• Paying for Christmas makes you feel stressed
• You’re still paying off last year’s gifts
• You have the same budget but a bigger gift list this year
• You’re saving for a big financial goal

Here are a few tips for how to tell your family you can’t afford Christmas…

Be honest

“I couldn’t afford to buy you a present.”

Tell friends and family that you’re trying to pay off debt and need to spend your money on that goal instead of gifts this year. There’s a good chance that most of your friends would rather skip the obligatory gift giving, anyway.

Maybe they’re trying to pay off debt themselves, and the only way they can “afford” holiday gifts is to charge everything. Most people are relieved to have one less person on their gift list.

Prioritize

There are tough choices that have to be made. If your family is far away you may have to settle for a remote video chat instead of flying. Decide to make the holiday about giving of self instead of giving of stuff. Focus on the traditions and family that are very important.

Read more: Temporary Budget Cuts to Help You Pay for Holiday Gifts

Offer an alternative to traditional gifts

Instead of going on a shopping spree, show your friends you love them and still want to spend time with them, even if you don’t exchange gifts.

• Invite friends or family members over for brunch or an inexpensive dinner.
• Share a bottle of wine or a few beers, along with crackers and cheese, hummus, chips, or other inexpensive snacks at home.
• Watch a holiday movie together at your house.
• Give people homemade cookies or banana or pumpkin bread.
• Take an evening walk together, sipping hot cocoa in a shopping district with a holiday light display. You can even take turns guessing which shoppers will acquire the most credit card debt by the end of the night.

Make memories

Gather the troops and head out to the park for a snowball fight or sled race. If it’s too cold or not cold enough, head inside for crafts and games. The internet is full of activities you can do with your loved ones.  Head out into the community and find free events to get you into the yuletide mood.

Make a few exceptions

If no gift-giving makes you feel like a Grinch, go ahead and give a few small gifts. But rein yourself in. You can always give your friends or family members a framed photograph of yourself, the two of you, or a group photo, printed out at any drug store for a few bucks. You can easily find unused, unopened picture frames at the thrift store.

Read more: Things to Know Before You Charge Holiday Gifts on a 0 Percent APR Credit Card

Give to the needy

Gift-giving from the heart isn’t the same as obligatory giving, and even if all you can donate is a $12 soccer ball for a kid you’ll never meet, this allows you to still participate in the holiday spirit.

A few suggestions for donations: Battered women’s shelters; children’s psychiatric hospitals; agencies for under-served children and families, nursing homes, or group homes for the mentally ill or developmentally disabled.

Take advantage of gift card deals

No, don’t buy a bunch of Olive Garden gift cards so you can get one free. These gift cards are for yourself. For example, every holiday season, my coffee shop adds extra funds to their gift cards. That means a $20 gift card has $25 on it, $50 has $60 and $100 can buy me $120 worth of coffee.

Using this method, you can recoup some of the money you spent on gifts on mandatory coworker gift exchanges and people too prickly to accept your current holiday terms.

Read more: Gift Card Tips: Get More Out of Giving Them

Celebrate late

I have a friend whose mom always worked on holidays so they did Christmas after. They’d go to the mall and make an all-day event of it, getting all the after-Christmas sales, eating lunch, and drinking cocoa. I was kind of jealous because they had so much fun and I swear she got more gifts than I did.

Save for next year

Start socking away money now for next year’s holiday season. Even $30 or $40 a month will add up to a tidy sum by next December. However, don’t be surprised if many of your friends and family members like the no-gift idea and hope you’ll do it again. If that happens, you’ll have saved money you can pay debtwith, add to emergency savings or even spend on a weekend getaway.

So, this year, give yourself a break. Enjoy the lights, trees, 24/7 holiday music and pray that Grandma doesn’t get run over by a reindeer. Without the burden of holiday debt crushing you down in January, you’ll be well on your way to a wonderful life.

Find out: How to Make a Holiday Budget