For years, December meant two things for me: twinkly lights and a growing credit card balance.
I’d start the month full of cheer and end it full of regret. Gifts, parties, travel, decorations, last-minute impulse buys, it added up fast.
By January, the joy had faded, and all I had left was debt I couldn’t pay off for months.
It took hitting a financial low point to finally change the pattern. Now, after four debt-free Decembers in a row, I actually enjoy the holidays. Here’s how I did it.
Step One: I Faced the Truth About My Spending
I used to avoid checking my credit card statements until after the New Year. Out of sight, out of mind, right?
The problem was that I was guessing what I could afford instead of actually knowing.
The turning point came in 2020 when I added up my total December spending.
Between gifts, takeout, decorations, and travel, I had spent over $1,800. I was shocked.
I started tracking every holiday-related expense, not just gifts. Once I saw how much I was really spending, it was easier to plan and say no to things that didn’t fit.
Step Two: I Created a Holiday Budget in October
I used to think budgets were restrictive, but it turns out they’re actually freeing.
Knowing I had a set amount to spend made it easier to say no without guilt.
Now, every October, I decide on a holiday budget. I list everything I’ll need money for, gifts, groceries, wrapping paper, extra gas for visiting family, and assign a dollar amount to each category.
According to a 2023 report from the National Retail Federation, the average American planned to spend $875 on holiday-related purchases.
That’s a helpful benchmark, but my number is based on my income and my priorities. Some years, I spend less.
Step Three: I Use a Separate Holiday Savings Account
I opened a free savings account just for the holidays and renamed it “Holiday Cheer Fund.”
Starting in January, I set up an automatic transfer of $50 every paycheck. By the time November rolls around, I usually have about $1,100 saved.
Seeing that money grow each month actually gets me excited about the season. It also removes the temptation to use credit cards.
Step Four: I Cut Out Gifts That Don’t Make Sense
I used to buy gifts for everyone, coworkers I barely knew, extended family I hadn’t spoken to all year, even neighbors I rarely saw. It wasn’t generous; it was stressful.
Now, I stick to a short list of people I truly want to give something to. And for others, I send a card or text instead. No one has ever complained.
Secret Santa or white elephant swaps with a $20 cap have become the norm in my friend group, and it keeps things fun and affordable.
Step Five: I Started Saying No Without Guilt
This was the hardest part. Holiday FOMO is real. But I realized that saying yes to every event, dinner, or fundraiser wasn’t making me happier; it was just making me broke and exhausted.
I started choosing what truly brings me joy and skipping the rest.
Sometimes that means staying in instead of attending a pricey dinner or turning down a gift exchange I can’t afford.
The relief I feel from not stretching myself too thin has been worth it every time.
Step Six: I Focus on What Actually Matters
Turns out, the best parts of the holidays don’t cost much. Baking cookies with my wife and kid, driving around to look at lights, watching old movies in pajamas, those are the memories I cherish.
The American Psychological Association has found that financial stress is one of the top reasons people struggle to enjoy the holidays.
Once I removed the money pressure, everything else felt lighter.
I’ve also started giving experiences instead of stuff. One year, I made a homemade “coupon book” for my wife with things like “one weekend of sleeping in” or “movie night of your choice.” She loved it, and it didn’t cost a dime.
Step Seven: I Use Credit Cards With a Clear Payoff Plan (Or Not at All)
I’m not anti-credit card. I still use one for travel points, but only when I have the cash already saved. If I don’t, I skip it. No more buying now and figuring it out later.
If I do use credit, I write down the amount and the exact date I’ll pay it off.
That simple habit has helped me avoid interest charges and stay in control.
Final Thoughts: My Holidays Are Calmer Now
These days, I actually enjoy the season. I’m not lying awake worrying about money or dreading my January bills. I’m present, relaxed, and able to focus on the people I care about.
Getting here took time. I had to let go of some habits and expectations. But the tradeoff has been worth it.
Debt-free holidays might not sound flashy, but they feel good, and to me, that’s what the season should be about.