The Top 5 Ways to Avoid Holiday Debt in 2025

Inside: Use these tips to avoid holiday debt and decrease stress this year.

The holiday season is underway.

And while the thought of celebrating the season with friends and family can be fun, it can also be stressful – especially when you’re on a budget.

Between buying presents and gifts, hosting holiday feasts, and traveling to visit loved ones who live far away, the costs associated with the holidays can add up fast – and if you aren’t careful, can leave you in debt. 

But you don’t have to take on holiday debt. 

While the thought of charging everything to your credit card and dealing with it later can be enticing, especially when you’re under stress, it isn’t great for your mental well-being – or your bank account.

With a little planning and foresight, you can position yourself to avoid holiday debt while still making the most of the season, spending time with those you love, and giving meaningful gifts.

Not sure how to make it happen?

I’ve got you covered. Keep reading to see how you can avoid holiday debt this year while still enjoying the holidays to their fullest potential.

Why is holiday debt such a struggle?

On Cyber Monday U.S. shoppers spent $14.25 billion. The total for online sales over Thanksgiving weekend exceeded $44.2 billion. This was an increase of 7.7% from the year prior. (source).

Sales are reaching new all time highs while consumers entered the holiday season in greater debt than years prior. Outstanding credit card balances reached $1.23 trillion, which is up 6% from the prior year. (source)

If you typically take on a little debt as the holiday season rolls around, you aren’t alone. In fact, last year, more than 1 in 3 consumers said they spent more than they could afford, landing themselves in an average of $1,249 of debt.

It’s easy to find yourself overextended financially when the end of the year rolls around. After all, there’s so much that you need to plan for.

Presents for your family and friends.

Flights back home during the most expensive travel time of the year.

Expectations of impressive Thanksgiving feasts and Christmas dinners.

New outfits for holiday celebrations and soirees.

Taking time off work, which, depending on where you work, means taking a hit to your paycheck. Not to mention inflation and the rising costs of virtually everything.

It adds up faster than we realize and leaves many of us in a not-so-great financial position for the start of the new year.

And for many of us, it’s easier to charge it to a credit card than save for it in advance, or make tough decisions about what we can and cannot afford. 

But by anticipating those expenses and taking some steps to mitigate them before you’re overwhelmed by the holiday rush or caught up in the emotions around the holidays, you can get a better handle on your finances and make it through the season without racking up debt. 

5 Ways to Avoid Holiday Debt This Year

Are you determined to steer clear of any holiday debt this year? It’s definitely possible – as long as you plan for it. 

Here are some steps you can take today to mitigate the damage this holiday season will do to your bank account:

1. Make a plan and a budget – and stick to it.

You need to start planning before the holiday season ever arrives if you’re going to make it through without spending more than you’d like.

It’s time to think about who you’re shopping for this holiday season. Do you really need to buy for everyone on your list? Would some people be relieved to not have to exchange gifts this year?

Question your assumptions and have conversations. There are many who would like to avoid holiday debt, so deciding to stop buying each other more stuff or at least keep them minimal may be a welcome relief.

Most people don’t need more stuff. Sadly, many people receive gifts that they don’t actually want and never use at the holidays. Opt for clutter-free gifts this year. You’ll save money, and they won’t end up with extra things to declutter later.

Budget all of your potential holiday expenses for the year and stick to it. By making a plan and committing to it, you can keep your overall costs much more controlled.

Avoid Buy Now, Pay Later

Part of the increased spending this year was due to more people using buy-now-pay-later services such as Klarna and Affirm.

A recent survey found that 38% of respondents had used BNPL services for at least one purchase during Black Friday weekend. Adobe’s data indicated that BNPL use grew 9% from last year. (source)

Unfortunately when you combine pre-existing credit card debt with using pay later services it becomes increasingly challenging to dig yourself out of the hole as the high interest rates accrue.

It’s a good idea to avoid these services completely and truly assess what are truly needs, instead of just wants.

No one wants a loved one to go into further debt to purchase gifts at the holidays.

2. Prioritize memorable, low-cost activities.

Celebrating the holidays can be expensive. Dinners at fancy restaurants, tickets to seasonal concerts and shows, and other holiday experiences can add up quickly.

And while they’re great ways to make memories with your family and friends, there are other, less expensive ways you can do it – as long as you plan for it.

Focusing on making memories over more stuff this holiday season does take intentionality and some creativity, but the end result is worth it.

Instead of going out to dinner, organize a potluck at your place. Instead of paying to go to expensive shows or concerts, see what inexpensive or free ones are available in your area.

Look for low- or no-cost holiday activities you can enjoy with your family. A stroll through a beautifully lit garden with a thermos of hot chocolate from home can be just as fun and memorable as an expensive show or outing – but way more affordable. 

3. Earn a little extra cash to boost your holiday budget.

If you know you can’t make your holiday plans happen without spending more than you currently have, consider finding a way to earn a little extra money before – or during – the season.

One way to do this is to get a seasonal job. Many companies hire temporary help to get through the holiday season.

If you have a few hours a week to spare, consider getting a part-time job at a local retailer, restaurant, or local business to earn some extra cash.

Another option? Sell your stuff. If you’ve got a house full of things you don’t really use, consider selling stuff you no longer want or need for extra cash.

Not only will this help you declutter your space, but it’ll also help you put a few extra bucks in your pocket to get you through the holiday season.

4. Take advantage of deals and discounts.

Retailers are often desperate to earn your business around the holiday season, and that desperation manifests in the form of deep discounts. Just about everything goes on sale – and if you shop smart, you can snag the things on your must-buy list at a great deal.

But you have to be prepared. Know what you want to buy before the holiday season ever approaches, and keep a watchful eye on your favorite stores to see what – and when – things are going on sale.

And to know what is actually a good deal, you have to know prices on the items you’re eyeing as some retailers will raise the prices right before the holidays just to make it appear like a better deal than it really is.

While Black Friday is known for having some great deals and discounts, the bargains aren’t limited to that weekend. They’ll continue all season long, until a week or two before the end of the year. If you don’t like the chaos of crowded shopping, there are plenty of online options.

By holding out for a great deal – and learning your favorite stores’ policies on price matching and price adjustments – you can make an impressive dent in your holiday shopping list without blowing your budget.

A word of caution: Be sure you are shopping intentionally and sticking to your list and budget. It is very easy to get sucked into buying extra stuff because they seem like such good deals. However, that won’t help you to avoid holiday debt.

Returns

Another thing to keep in mind is that if you did get sucked into sales and purchased more than you intended, you can return excess items.

If you’re already feeling off-track on your holiday spending, don’t beat yourself up. It’s ok. You can still re-evaluate your purchases and make adjustments as needed.

5. Simplify everything you can.

One of the very best ways to avoid holiday debt this year is to simplify the season in every way you can.

Have open conversations with family members about simplifying the holidays this year. Talk about your needs and discuss expectations.

This may mean you opt not to trade gifts with each other. You may need to stay home and not travel to save money this year.

Think creatively about how you could adjust your celebrations. Stick to simple decor and don’t buy extra stuff you don’t need. It’s easy to get caught up in the emotions of the holidays, but you can enjoy the season without going overboard.

For gift-giving, think outside the box. Consider experiences over expensive gifts.

If you do want to buy some tangible gifts, focus on useful ones that won’t break your budget or create clutter.

Stocking stuffers are another area you may want to simplify, either by forgoing them or opting for consumables.

Rather than assuming you need to do things the way you always have, this is an opportunity to focus on what’s really most important and let go of the things that aren’t.

The best holiday memories are often the simple moments shared with those you love. You can still enjoy the holidays as you also avoid holiday debt and the regret that comes with it.

How do you avoid holiday debt? Leave a comment and share your tips and tricks!

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