Balance Debt Repayment with Holiday Expenses: A How To Guide

November 1, 2018

Paying off debt is hard enough on a normal day. Forcing yourself to continue living frugally during the holidays can be downright depressing. But don’t despair quite yet, my dears! There are plenty of ways to balance debt repayment and the spending of the holiday season without being a drag.

In this blog post we will tackle how to balance debt repayment with holiday spending from three angles.  First, setting a plan and a budget that fits your lifestyle. Then, smart ways to help you save more. Finally, I share holiday specific tips to save as much as possible in those areas.

My hope is that you can gather some or all of these tactics in a way that makes sense for your unique life.  Pick several and take action on them today for a joyful holiday season. 

Tactic One: Setting A Smarter Holiday Budget

The very first place to start, is to calculate a reasonable amount to spend for your holiday gift giving.  Pick an amount that feels right in your gut. Be sure this amount still aligns with the payments you’ve been making on your debt throughout the year. 

You may not even have an inch of wiggle room in your budget, but you can borrow from other categories.  You will need to do some juggling to budget properly, but it can be done!

First, Treat Your Existing Debt As A Bill

If you don’t already- you have to treat your debt repayment as a bill, beyond the minimum monthly payment.  Honestly, this portion of your debt repayment can be painful. But, if you are only paying the minimum on your credit cards or student loans, you’ll find that you never get ahead. You’ll simply tread water month over month.

To balance your debt repayment with holiday spending, you need to decide on an extra amount to pay on your debt.  This amount should be above the minimum payment you have to pay every month.  Commit to paying a certain amount extra- even $25 over your minimum payment.  After this number is settled, you can decide where to go from there.

Once you set that amount, you will treat your debt repayment as a mandatory bill during the holidays and beyond.  Just like your utilities and car insurance, paying down your debt is non-negotiable.  The holidays make it tricky, but you have to make it a priority.  It’s not fun, but setting this commitment now, will help you resist temptation and stick to your budget.


Reallocate Your Budget Categories For Holiday Spending

Now that you’ve calculated how much debt you’ll pay down and treat it as if it were a mandatory bill, you’ll have to make adjustments. Identify categories to make room in your budget for holiday spending. You may need to borrow from one to fund another.

If you’re living paycheck to paycheck, or have a very tight budget as-is, you’ll quickly find there isn’t much wiggle room.  Additional expenses for the holiday add up fast.  Such as holiday travel, work parties, gifts.  Don’t forget- those new holiday decorations that always seem to end up in your shopping cart in Target. Every expense needs to be considered, so be thoughtful.

See what you can reduce in any other existing categories- food, entertainment, shopping or utilities to make room.  Having a strict budget means that something will have to give- either in what you carve out for holiday spending, or in other monthly categories.  

Later in this article, we will get into tactics to help you save on holiday gift giving. But for now- take a look at your biggest spending categories and see where you can funnel funds from.  For November, December and even January, you’ll need to set aside extra cash for holiday expenses and to pay back holiday purchases.

While I hope you won’t go into additional debt for the holidays, if you do- make a commitment to continue your budget adjustments through winter to pay off any expenses. 

Tactic Two:  Save More & Earn More

If you have time before the holidays arrive, I highly recommend doing a fiscal fast to save money.  Additionally, the Mason Jar Money Method is a very popular technique to sock away more cash, and you only need $1 a jar to start.  

If you are determined to maintain your normal holiday traditions, consider opening a savings account specifically for holiday expenses. Add a small amount every paycheck throughout the year and before you know it, you will have a nice bit of cash set aside. Not sure which bank to choose for your holiday account? I highly recommend Capital One 360.

Use your smartphone to save more by downloading money saving apps to help you save money and time on purchases you’re already making.  One of the most inflated categories in anyone’s budget is often entertainment and restaurants- focus on saving money by eating out less and dining at home.  Making some changes before the holidays arrive can make saving a bit less painful!


Fast Ways To Earn More Money

If it’s a bit too late to start saving for the holidays or you’ve already cut your budget to the bone, your next option is to earn more.  Even taking on a temporary or part-time side hustle to earn more money can make a world of difference in your budget. 

If your budget is already tight, setting a goal of just $100 or $200 in earnings can make the impossible, possible.  Consider offering pet or child-sitting, fall lawn cleanup, or driving for Uber or Lyft.

Working as a freelancer from the comfort of your own home is something you can do after your day job or on weekends.  If you have any website coding skills, are good with project management or have a background in writing, you can find people in person or online that need your help. 


Declutter And Get Paid

Before a single gift is exchanged or Christmas decoration is pulled down from storage, take a page from Marie Kondo’s book and simplify your life.  Anything that doesn’t spark joy, needs to go.  Often, our clutter costs us more than we think.  

You likely have old exercise equipment that was purchased with good intentions but now collects dust. Or, a DVD collection that looks unsightly in your living area and could go.  Additionally, you probably have more Christmas decorations than you could ever use. So, it’s a good time to declutter.

The holiday season is a great time to start listing all your unwanted items for sale.  I’ve had great luck doing this with Facebook Marketplace.  Often, buyers are local and you won’t need to worry about shipping pickup for bulky items.

I prefer this to Craigslist and eBay because it works better for your large items. Plus, the benefit of having Facebook is that you know you’re not inviting a totally faceless person to your home after an item is sold.


Become An Airbnb Host or Guide

Personally, I’ve had the most success earning more money by being a host on Airbnb and renting out an extra room in my house.  On an average month, I can pull in over $500 for a room I wasn’t using.  If you followed my last tip above, you can sell off unwanted junk to make room. Renting out that freshly decluttered room is a double whammy of earning potential!

If you don’t have a home of your own, you can still earn extra cash by being an Experience Host on Airbnb.  If you’re willing to play tour guide in your local city, you can get paid for creating a unique experience or tour that people will pay for. 

Experiences on Airbnb can range from a walking coffee tour, history tour or crafting class.  It costs nothing to sign up to host an Experience on Airbnb.  A friend of mine actually hosts a walking tour in his small town in Canada, which is where I got the idea!  

Tactic Three:  Save Money On Holiday Festivities

Skip The Gifts, Really! (Here’s How)

If you just spent a significant amount of time and effort selling off your clutter, you probably don’t want to clutter up your home again.  Seriously consider talking to your loved ones about skipping gifts entirely. Of course, have the conversation early.

Skipping gifts doesn’t have to be a holiday tradition. But, it can be a welcome refresher if you’re really making big life changes.  If you aren’t comfortable ditching gifts entirely, consider the following:


Give Your Time Instead Of Stuff

As we get older, some people are weird about asking for help.  Think ahead- what is going on in someone else’s life? Offer your time and tell them it’s taken care of.  

Often, people need help with a move, childcare, landscaping or a big house project. If you’re handy or crafty it can be a godsend for someone who needs it.  Offer to play photographer for newborn photos, Christmas cards or family reunions.  Photos are a high-value item that can cost you little to do.

As of this writing, I would be blown away if someone offered to pet sit for me! Having two dogs, a pet sitter would save me over $300 per year. Offering lessons is also something I cherish as a gift.  Consider teaching someone how to cook, sew, maintain a car or take better photos. 

Finally, consider playing family historian.  If you have skills tracking down family histories or collecting recipes, putting them in a book can be low cost but truly sentimental.  As for family photos, taking the time to make copies or digitize family albums is a true treasure of a gift.

Celebrate Smarter & Potluck It

Gifts aren’t the only holiday expense to consider. Food, especially when cooking for a large group, adds up so stinkin’ fast! If you are in charge of hosting a holiday get-together, consider making it a potluck.

Trust me, people won’t mind at all; folks realize that hosting in itself is a a huge undertaking. I do recommend assigning each person a specific course.  Doing so ensures you don’t end up with 10 pies and no entree. (Mmmm, pie.)

Helpful Hint: If you have yet to jump on the Instant Pot bandwagon, I highly recommend it for both saving money AND time. Seriously, it’s magic, and perfect for potlucks.  Plus, you can bring it with you to keep food warm for hours after cooking.

The key here is, have a conversation early about hostessing expectations and get your family on board.  With some research on Pinterest, you can cut corners and still have an amazing get-together.

Holiday Crafting To Save Money

As you know, I love myself some crafts.  So, I’m a big proponent for making your own gifts. And don’t worry, you don’t have to possess a lot of skills to do this.  You can make something as simple as an infinity scarf for the women in your life or some natural branch coasters for the guys.

Of course, you could always cater to their sweet tooth and make them some of their favorite treats. Gifts don’t have to be store-bought to be special and you can pick up new cooking skills to boot.  

If you are lacking some inspiration, our Crafting & DIY section is chock-full of tutorials, ideas, and links to awesome projects and homemade gifts. A couple of my personal favorites are Top Ten Hostess Gifts and 20 DIY Cocktail Mason Jar Gift Ideas. Alternatively, head on over to our Pinterest for even more mind-blowing crafts.

Cut Down On Gifting- Pick a Name

Something my family does every Christmas is we pick names. Everyone’s name goes in the hat and we each pick one. We are then responsible for giving a gift to that one person. Not only does this save big money, but it also reduces the stress of trying to find a perfect gift for everyone.

Helpful Hint: I actually found an awesome website that helps take the hassle out of picking a name. It is called Secret Santa Generator and it is fan-tab-u-lous.

Finally though – remember, debt is not forever. If I had any real piece of advice that has helped me through lean times, it is to look ahead. Right now, you’re juggling debt repayment with holiday spending and it can be a tough balancing act.  Just remember, it’s hard, but it’s not forever.



Additional Recommended Reading:

The Best Debt Repayment Books on Amazon

If you’re feeling really heavy that you’ve ruined Christmas, don’t despair.  Your work to pay down your debts will pay off, and you can have fun along the way. Imagine how much freer you will feel next Christmas without the burden of debt. 

Remember, the holidays are first and foremost about spending time with those you love. Use these tips to balance debt repayment with your holiday gift-giving so you don’t lose your momentum.

Concerned how you are going to balance debt repayment with your holiday expenses? We have a few really great tips to help you stay on course.

Further Reading:


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