Debt-Free Christmas Challenge BF Blog

Debt Free Christmas Budget Challenge

We face many challenges when saving for Christmas in advance. You may still have last year’s Christmas expenses to pay.  Your current debt does not allow you to save for anything much less for next Christmas. Your current bills leave very little wiggle room for saving. You have trouble staying on budget. Nevertheless, Christmas will come again and you will need to have a way to purchase gifts again. That is why the Debt Free Christmas Budget Challenge is for you!

Deal With Old Christmas bills for a Debt-Free Christmas Budget Challenge

First, work to pay off an old debt to start the year fresh. Create a get out of debt quickly budget: 

  1. List all your credit card debt
  2. Prioritize the highest interest first
  3. If you have balances under $1000 pay those off first for a quick win and encouragement.
  4. Once the smallest balances are paid off tackle the bigger bills with the highest interest.
  5. If you have two or more bills pay as much as you can on one while paying the minimum balance on the others.
  6. When the first one is paid off add the money from this one to pay off the next bill.  Continue paying the minimum balance on your other bills.  Repeat this process until all bills are paid off.  This may take a few months depending on how much you can afford over the minimum balance.

Plan to be done within the first 3 months of the year.  The sooner the better to start this Debt-Free Christmas Budget Challenge for the new year.

About four in 10 (41%) of U.S. adults who celebrate the holidays said they’d be willing to go into debt, or deeper into debt, for shopping. Also, of those cardholders who already have credit card debt, more than half (60%) said they would add to it for the holidays. According to a poll by              

Let’s break the cycle of perpetual debt.

Saving for a Debt-Free Christmas Budget Challenge

Let’s start by asking a few questions:

How much do you want to spend?

Whom do you want to gift?

How much to spend on each gift or per person?

How many gifts per person? 

Prioritize by importance: Kids, spouse, in-laws, friends, and other family members. Christmas is primarily for children so I would plan to spend the bulk of the budget on them.  On average parents plan to spend about $276 per child under 18 years of age. I recommend no more than $75 to $100 per child especially for those under 5 years old. Based on your Christmas Budget you may have to make some cuts to your initial list.

Debt-Free Christmas Challenge BF Blog

Keep in mind not everyone can get a gift. Consider Christmas gift exchange ideas for big families. This way the burden of purchasing a gift for everyone is reduced to one or two.  This is a great way to cut down on gifts and make it a fun event for the entire family. Thereby, leaving money for charitable giving as well.

Christmas Budget Challenge and Charity and Decor

 However, you cannot support every Christmas charity so choose wisely.  Pick charities that are associated with your church or have a reputation for donating most of the money to the actual cause. Also, join food and clothes drives for local families.  Donate time to help shelters and pantries.  Your time is an invaluable gift as well.  After all the work is done it is now time for some holiday cheer.

Here again, do not expect to attend every event that requires a gift. To stay on budget, you may have to cut your invites to your party, dinner, etc.  Again, everyone cannot be invited to your event, nor do they expect to be invited to every event.  Review your invite list carefully and manage everyone’s expectations. Now on to the décor.

Old decorations can be repurposed – I have saved a ton of decorations over the years so my tree can look different every year. Also, picking up items after Christmas is the best way to refresh for the next year or get a jump on next year. There are deep discounts to be found at this time.  After holiday sales typically reduce items from 50 to 70%. Now on to fund Christmas.

Debt Free Christmas Budget Challenge in Action

Now that you know what you want to spend, who you want to spend on, your potential party attendance, time to put the plan in action. Now to work on getting Christmas gifts on a budget.

Decide if you want to have an expensive, average, or below average Christmas Spend.  Per Gallup, the average consumers plan to spend $837 on gifts this season. An above-average Christmas would be $1000 to $1,127.58. With the average being $837 to $999. Finally, a below-average Christmas spend is any amount from $400 to $800.

Debt Free Christmas Budget Challenge

Start the first of January or as soon as possible for the most successful Debt-Free Christmas Budget Challenge.

  1. Create your Christmas Budget for the next year.
  2. Start right after the new year
  3. Review what you spent last year
  4. Plan to pay off last year’s Christmas debt by February 1st
  5. Set up a Sinking Fund for the upcoming Christmas
  6. Open a saving account and set up an auto-draft from your checking account or directly from your payroll account.
  7. Decide what you plan to spend and divide by 52 weeks, 26 weeks, or 24 weeks based on your pay periods
  8. Set it and forget it until it is time to use it
Debt-Free Christmas Challenge BF Blog

Here is what you need to save per month to reach

For $1000

                Weekly – $19

                Bi-weekly – $39

                Bi-monthly – $42

For $850

                Weekly – $16

                Bi-weekly – $32

                Bi-monthly – $35

For $400

                Weekly – $8

                Bi-weekly – $16

                Bi-monthly – $19

I developed a downloadable sheet for you to keep track of your savings. Click the link for the template to track your savings progress.  Update each week, bi-week, or bi-monthly deposit to track your savings.  Use this sheet to encourage you to stay on budget.

Savings Tracker

Budgeting Tools to help you plan your Debt-Free Christmas Budget

There are many budgeting tools available such as the good old fashion pen and paper, spreadsheets, and budgeting apps. I prefer using spreadsheets as I create my budget based on my current income and expense then I create a spending plan for the year.  This is where I map out how I plan to spend, save, and invest my income the year. It also allows me to keep track of variable expenses such as gas and electricity.  Pen and paper allow you to quickly budget on the fly.  You can easily create an efficient budget by pay period.  You can outline what expenses you plan to pay based on your current cash on hand. 

Digital apps teach you how to budget following their step-by-step guidelines during the set-up process.  Here are a few to check out (Free),  YNAB (Fee)Pocket Guard (Free)Marcus (Free), and Good Budget (Free) However, I find them restrictive and inflexible when dealing with variable incomes and expenses.  

Here is my free budget planner for those of you who prefer pen and paper. For those of you who like to use spreadsheets attached is the Google Docs link.  You now have all the tools you need to have a Debt-Free Christmas Budget Challenge.

How to Save Money on Gifts after the Debt Free Christmas Budget Challenge

Shop sales online and in person.  However, do not buy it just because it is on sale.  Black Friday sales and Cyber Monday are by far the best time to shop.  However, Black Friday discounts seem to start before and after the actual “Black Friday”.  So, you have time to shop around for the best deals.  Also, don’t forget to use coupons and coupon codes from your favorite retail store.  Visit websites and get on the email lists for discounts on your current or future orders.  You can always unsubscribe after the holidays.  And if you abandon that online cart after providing your email, check your emails for abandon cart discounts.  Some of these discounts are as high as 20%.  This could turn an unfordable gift into a great affordable one. You are now all set to have a Debt-Free Christmas Budget Challenge.

Debt-Free Christmas Budget Challenge BF Blog

Debt Free Christmas Budget Challenge Save Money on Gifts Recap

  1. Shop early
  2. Catch all the sales
  3. Provide email to your favorite retail online for discounts
  4. Stay on Budget
  5. Stick to the list of gift recipients
  6. Hold firmly to the amount per gift
  7. Any savings from sales can be held as a contingency
  8. Do not shop for yourself unless you are buying all the gifts including the ones for yourself.
  9. Keep an ongoing tally of what you spent versus what you wanted to spend
  10. The best gift option if you are not sure is a gift card.

56% of US consumers prefer a gift card per Capital Counselor. This will also ensure that you stay on budget because if you plan to spend $30 on a gift then a $25 gift card with any fees will keep you on budget.

How To Make More Money To Help Out?

However, if you get a late start to savings you may need to make some extra money to help with your Christmas purchases.  Try getting a 2nd gig or if you already have a side hustle see if you can ramp it up to make some additional cash during the holiday season.  Check for any seasonal part-time jobs available in your area.  If that is not possible ask your boss for a raise of bonus.  Especially if your company has had a good year and your efforts contributed to the bottom line.  I also like to use my credit card resources. 

I always use accumulated points from credit cards, cash-backs, and/or forgotten gift cards. Purchased quite a few things this year using points and online gift cards. This is in addition to the sinking fund I set up for Christmas.  It helps me to stay on budget, so I don’t have to dip into any other savings account.  Because one thing I never do is touch the Emergency Fund.  Christmas is not an emergency since we know it comes every year at the same time. Therefore, it can be planned for.

Debt Free Christmas Budget Challenge Extra Cash Recap:

  1. Gig/Side Hustle income
  2. Seasonal Part-Time job
  3. Raise or Bonus
  4. Credit card points, cashback, or unused gift cards

Good luck with this  Debt-Free Christmas Budget Challenge.  You have all the tips, tricks, and tools you will need to be successful. Breathe, focus and relax.  You got this.  Next Christmas is going to be awesome!

Dishonest money dwindles, but whoever gathers money little by little makes it grow.

Proverbs 13:11

Here are additional resources:

$400 Christmas Budget

Setting Up A Budget For Beginners

Financial Literacy For Beginners

Let’s Budget, Spend, and Live!


10 thoughts on “Debt Free Christmas Budget Challenge”

  1. I love the line Christmas isn’t an emergency it comes every year! I did not realize so many people go into debt for Christmas.

  2. Yay debt free!! We tend to buy gifts throughout the year…this helps a lot so we don’t have to come up with a giant sum at once.

  3. I like the chart that helps you save money and be able to see your progress. We went a little overboard with Christmas this year… not sure why… since we are usually really good at staying on budget.

  4. These are amazing tips! I’ve always said that Christmas gifts are not worth going into debt over, but there have been years where it’s been hard to stick to a present budget! Thanks for sharing

  5. Such great ideas for a debt free Christmas. Love the budget sheet. I live debt free and Christmas is always on budget, however I know many how will benefit from this post!

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