Spending around Christmas, especially in the United States, can get pretty crazy. Some surveys last year estimated many intended or guessed they’d spend nearly $1,000 on gifts. We all want to spread Christmas cheer where and when we can, so how does personal finance fit into that picture?
Some would say that if you are climbing out of debt, you should go cold turkey on the gift giving. I find this to be a little bit extreme. At the same time, we have a goal of shedding debt, not going further into it. So how do we strike a healthy balance?
For us this year, we set a dollar amount on the total that we wanted to spend. We named a number, listed out the people we wanted to buy gifts for, and then divided our gifting total by the number of folks we were buying gifts for. This way, we wouldn’t feel guilty about swiping our debit card over and over again with no spending limit in sight. Budgeting is important year round, but I would argue that it is particularly important around the holidays.
In addition to setting healthy boundaries with our giving, consider what you could do with any cash you get for Christmas. While most gifts tend to be clothes, electronics, home furnishings, or other items, cash is flexible in what it can be used for. Consider setting aside a portion of any cash you might receive from friends or family, and earmark it for making a debt payment. Christmas bonuses from employers are also another good windfall to leverage against debt with.
This year, I received a pretty decent chunk of cash from a very generous family friend. I was taken aback by her generosity, and thankful for the boost that it provided our finances in what is typically an expensive month. I could go out and get myself a nice new gadget (my biggest shopping weakness), or I could use it to get ahead on where we want to be with our debt payments with eyes on the new year ahead.
Paying down debt is an arduous process. Getting out of it takes self-control, and wise decision making down the stretch. Instead of using gifted cash for something you may or may not use in only a few months, give yourself the gift of getting one step, big or small, closer to becoming debt free. Your future self will thank you in due time.
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