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159 How to prevent holiday debt

November 18, 20208 min read

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Have you ever survived the holiday season financially intact? As you approach the (potentially) most expensive time of the year, you can prevent holiday debt with these tips to keep you on track.

Whether 2020 has left you in a tough place financially, or whether you’re prioritising saving for your future, don’t add to the strain of 2021 by starting the year in a ton of holiday debt. It takes so much effort and sacrifice to get rid of debt that it just isn’t worth it. If you don’t have it, don’t spend it.

Show notes:

  • [01.36] Be prepared.

  • [03.43] Manage expectations.

  • [05.49] Agree a level of spend with others.

  • [06.50] Be creative.

  • [07.50] Keep the end in mind.

Quotes

“And what’s interesting is how much of an important life lesson it is for our children to learn that money is finite, and we can’t have everything. “ – Lisa Linfield

“Choose what’s worth it to spend money on, and don’t spend it on what’s not.” – Lisa Linfield

“If you know one of your family has had a tough year or is battling financially, then be proactive and offer to limit the price of the gifts, or skip the adult presents and just focus on the kids.” – Lisa Linfield

“Give what you can give, but don’t sacrifice your savings, your future and the REAL needs to buy things your kids or family that they won’t remember in 6 months.  Your future is too important for that.” – Lisa Linfield

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TRANSCRIPT

Hello everybody and welcome to Working Women’s Wealth.  I’m Lisa Linfield, and I’m creating a community of women passionate about making sure that their money works for them to create the life they dream of for themselves and their family.

 

Today we’re going to talk about how we survive the holidays financially intact.  Between Thanksgiving if you’re in America, and the Christmas holidays, this can be an expensive time of year for many.  And, if you’re in the Southern Hemisphere, it’s followed immediately by Back to School, and the start of a new school or university term… which means significant extra expenses not only in terms of clothing, stationary, textbooks, but also in tuition fees.

 

The challenge is, if we don’t watch our spending closely through this period, between the travel, food, gifts, experiences and other expenses, we end up by the end of January further in debt, with a huge hole to climb out.  And as I always say about paying the interest on debt – it’s you paying for the bankers to sit on the beach while you stay home.

 

So here are some tips to stay on track.

 

Be Prepared

 

My first, and most important tip (that I struggle with myself but am getting WAY better at it), is BE PREPARED.  When it comes to spending money, I know first hand that if you leave it to the last minute, you are definitely going to spend more.  When you run out of time, you’ll buy what’s there.  But if you gradually buy gifts, then you end up being able to take the time to go to outlet malls and buy cheaper, and be careful about what you buy and don’t buy.

 

Make a list of what you need, and a budget per person, and then stick to that list.  We all know that gifts are swings and roundabouts – so if you go a little over with one person, then make sure you go a little under with another!  And the best way to stick to that is to go shopping with cash only and no cards.  That way the temptation to spend over is gone – and it really forces you to do the work to stay in budget.

 

Buying in the Black Friday sales is also a great idea… again, it’s around being prepared.  Just make sure that you stick to your list – don’t just buy because it’s on “sale”.  Many pieces of research show that in fact not all the items truly are on sale – so don’t feel pressured to buy a gift the person doesn’t need!

 

Along with being prepared is to shop online.  You are less likely to be distracted, and so only buy what you don’t need, and also you’re able to shop around for the same thing to find the best thing.  If you get all your shopping in one place, you are also more likely to get shipping for free. 

 

Manage Expectations

I know that we all would love to have an unlimited supply of gifts for others for Christmas, but the reality is we can’t.  And what’s interesting is how important a life lesson it is for our kids to learn that money is finite, and we can’t have everything.  They learn to value what they have.

When you manage expectations in a quiet moment, ahead of time, it’s amazing how bought in kids can be.  They do understand that you’re trying their best, and they can understand context – like a tough year financially, or money spent on a vacation over Christmas.

 

I always say that we can ‘have it all’ when it comes to money if we learn to prioritise what’s ‘Worth It’.  None of us can spend money on everything.  Choose what’s worth it, and prioritise that.  In our family, holidays are in the worth it category, gifts are not.  So we explain to our kids that in order to have the amazing holiday on the beach, they can’t have big gifts.  When we ask the girls which they choose, they are unanimous – they’d rather have the holiday at the beach.

By involving them in that conversation, and managing expectations early, that avoids the disappointment on Christmas day of expectations not met.  It also teaches them one of the most important lessons in life – choose what’s worth it to spend money on, and don’t spend it on what’s not.

 

The other people you could manage expectations of is other adults in the family or friends circle you’ll be spending the festive season with.  If 2020 has left you in a tough place financially, don’t add to the strain of 2021 by starting the year in a ton of debt.  Have an honest conversation and ask everyone to limit their spending.

 

Agree a level of spend with others

The reality is that these holidays are expensive for EVERYONE… so be open with your friends or family about NOT spending too much.  In our extended family Christmas presents are given only to kids under the age of 18… and we each get one gift from ‘the family’.  As we usually spend Christmas with aunts and cousins, this is a huge cost saving.

 

And, if you know one of your family has had a tough year or is battling financially, then be proactive and offer to limit the price, or skip the adult presents and just focus on the kids…. Or do ‘miss a year’.  Remember the Chinese concept I love so much of ‘saving face’ – people feel embarrassed to mention they’re in a pickle, so if you offer just to do kids presents that removes the pressure of half the cost, but still provides a focus at the gatherings.

 

Be Creative

Try be creative with your gifts – especially if your children and family love that.  You can even use it with the kids as a vacation activity if there’s enough time before Christmas to make the presents.

 

I am NOT gifted with artistic creativity – but I do think laterally about my presents.  My girls up until second grade got school supplies as their Christmas presents, including their school uniforms, as at that very young age, it was still very exciting to receive school stuff.  That way, they thought they were getting a lot of presents and I didn’t have double the costs of Christmas and back to school!!!!

 

We also fill their stockings with wrapped chocolates and sweets – which they cherish knowing it’s all they’re getting for the vacation…. And they still have the fun of opening a ‘present’ and seeing what’s inside.

 

Keep the end in mind

Lastly, and most importantly, you need to keep the end in mind.  It takes so much effort and sacrifice to get rid of holiday debt, it isn’t worth it.  Give what you can give, but don’t sacrifice your savings, your future and REAL needs to buy things your kids or family won’t remember in 6 months.  Your future is too important for that.  Don’t go into debt, don’t use your emergency savings – if you don’t have it, don’t spend it.

 

And as I say each year, save each month for the festive season, starting in January, so that you don’t need to go into debt each year.  You know it’s coming, so be prepared.

If you are in debt, please do go to workingwomenswealth.com where you can find a Debt worksheet to help you get control of your debt, and just search debt in the search bar and you can see a whole bunch of episodes on debt.

Have a great week everyone, and please do share this episode with someone that you think can benefit. 


Lisa LinfieldChristian MoneyPodcastBusiness OwnerEntrepreneurholidaysholiday debtspendingshoppinginvesting vs paying off debt
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Lisa Linfield

Lisa Linfield is on a God-given mission to free 1 million women from the weight and stress of money. She's a CFP, founder of a wealth management business, and podcast host of Working Women's Wealth

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