Ho-ho-No: 7 Ways to Not Break the Bank This Christmas

Editor’s note: This post is from longtime personal finance journalist Donna Freedman. It’s based on an excerpt from her second book, “Your Playbook For Tough Times, Vol. 2: Needs AND Wants Edition.”

Donna has created discount codes so that Wealth of Geeks readers can get the e-versions of her books for just $4 each! See info at the end of the post to learn more. You can also find both Vol. 2 and its predecessor, “Your Playbook For Tough Times: Living Large On Small Change, For The Short Term Or The Long Haul” on Amazon and Kindle.

Think back to last Christmas. It was fun, right? Now: Name everything you got.

All of it, including what was in the stockings. If you’ve got a significant other and/or kids, invite them to do the same.

Unless you specifically limited the number of gifts you requested or asked for just one or two special things, I’m betting you won’t be able to remember it all. Pretty sure your partner and kids won’t, either. (I know that I can’t.)

Then why do we lose our damn minds every December? (Or sooner, if we shop Black Friday and Cyber Monday.) I’ll tell you why: Because marketers are very, very good at what they do – and as a result, too many of us are willing to go into debt (or at least to overbuy) to satisfy someone else’s idea of the perfect holiday.

The year’s hottest toy(s) must be obtained at all costs, even if that means an eBay bidding frenzy. Big-ticket items such as electronics or jewelry – or, heaven forbid, a new car with a big ribbon on it – must be included. Certain brands or stores may be preferred. The same number of gifts must be given to each person so that you’re not accused of favoritism.

Never mind whether you can afford any of this or not. You have to show your loved ones how much you care!

That’s a sad way to define love – and an unquenchable one, since the ante gets upped each year. The 2-year-old who has as much fun with the box as the toy that came in it will become more demanding by age six or age 16. The spouse who was thrilled with two gifts under the spindly little Charlie Brown tree now has his or her eyes on diamonds or a home theater system.

Those who are overindulged develop a sense of entitlement and those who overspend each year could wind up not just indebted but also very disappointed because s/he didn’t satisfy every person’s wish.


Toning It Down

Personally, I like the four-gift rule: Something you want, something you need, something to wear, something to read.

But maybe that won’t work for you. Maybe this is the one time of year you like to overdo things. Have at it, then – if you can afford it.

And if your shopping spree means carrying a balance on your credit card? Don’t do it. Just don’t. It can take months to get those credit cards paid down – and every dollar you spend in interest is a dollar that can’t work for you any other way.

Bonus bummer: This time next year, people might not even remember everything you got them.

Here are seven ways to keep yourself from overdoing it this year.

Take It Back.

So you blew it already, buying one or two (or 10) too many gifts for your loved ones. So return them, already. (You did keep the receipt, didn’t you?)

Seriously: Just because you bought it doesn’t mean you have to give it. Maybe your heart is saying, “Can’t wait to see the look on kiddo’s/spouse’s/brother’s face when this baby gets unwrapped!” However, your heart will ignore the fact that you went $200 over your holiday budget.

If your rational mind is shrieking, “Michael, have you lost your damn mind again this year?” – well, listen to it.

Maybe a compromise is possible. Perhaps you could return a few smaller gifts to make up for the overage or ask someone else to go halfsies with you on the cost.

If not? Well, you’re an adult. Act like one. Give responsibly, not emotionally.

Remember: It’s your heart, not your head, that those Madison Avenue folks are targeting. Which brings me to my next tactic…

Walk It Off.

Any time you find something, you think your spouse/kid/parent/sibling/BFF can’t live without, don’t rush straight to the cashier. Instead, put the item in your cart or basket and do the rest of your shopping. Before you head toward checkout, separate that item from everything else and look at it more critically. Possibly that flush of instant love you felt 20 minutes earlier will have simmered down a bit.

And if not? Maybe you should buy it – but, again, only if you really should. Get real with yourself: Have you bought that person enough gifts already? (It’s easy to overdo things, especially for a small child or a new love.)

Is the gift amazing enough to make a real difference in the person’s life, or will it wind up gathering dust with all the other unplayed-with toys/unworn T-shirts/unused cooking utensils/unwatched DVDs?

Or you could…

Sleep on It

Put the item back on the shelf/rack and go home. If you dream about it all night long and wake up longing to gift it, well, you may need to seek professional help.

But seriously: What’s just as likely is that you can’t quite remember what made the item so irresistible in the moment. Even if you do remember, it might seem like too much trouble to get back in the car/on the bus and return to the shop. Yes! Go with that! Sometimes laziness pays off.

And if you absolutely, truly, madly, deeply love it and can’t imagine not giving it? Maybe you should buy it. Or maybe you should….

Distract Yourself

Don’t you have something better to do than shop right now? Maybe you could take your dog for a walk, organize a closet, have a nice hot soak, write a letter to your grandma, look through your pantry, and dream up a creative new entrée.

Staying busy can keep the perfect-gift! feelings at bay until whatever impulse motivated them (boredom? loneliness? worry that you aren’t giving enough?) fades away. Bonus: You could end up with a cleaner closet or a delicious dinner.

If you don’t think that will work, reach out and…

Get a Friend to Talk You Down

Call a pal who will remind you (lovingly and respectfully) how frustrated you’ve been lately about your inability to pay off the last few hundred of consumer debt. Jeez, Michael: You really want to add another couple hundred to the total? Especially since you told me you were already done with your shopping? Dude, NO.

Just talking it out might make the impulse go away. Or maybe the friend could help you….

Brainstorm Smarter Alternatives.

The two of you can think of better places for that extra money to end up. A few possibilities:

  • Pad your emergency fund or your financial disaster survival kit.
  • Throw it against existing debt.
  • Make a larger-than-usual payment on your mortgage.
  • Add it to your Roth IRA or some other retirement plan.
  • Create a sub-account in your online bank account that’s devoted to a bigger-ticket item (say, a trip to Ireland).

You might be surprised how much those careless purchases could add up to in a year if you avoided making them. And speaking of adding up, you could also….

Suss Out the True Cost.

You can parse this several different ways.

How many hours will you have to work to pay for that cool jacket or that new phone? (Be sure to figure that amount in after-tax cash rather than gross-salary dollars.)

If you’d be buying with a card that’s already got a balance, how much longer will it take you to pay off the new total and/or how much more interest will you pay?

Thinking in terms of a Roth IRA or some other retirement product, what could compound interest turn that amount into over the next 20 years?

Avoiding Opportunity Cost

About that last: Be honest about how often you spend impulsively or mindlessly in a typical year, then apply the compound interest scenario. Those who have tracked their spending are often surprised how easy it to nickel-and-dime themselves into short-term insolvency.

Now think about the long-term opportunity cost of the money that slips too quickly from your wallet. That’s money that’s no longer working for you. You can’t use it to slay your student loans faster, make a larger down payment on a car (or a house), fund a more secure retirement. Or, maybe, to make that trip to Ireland.

Understand: There’s nothing wrong with spending money. That’s part of why we work: to earn money to pay for the wants as well as the needs. But the spending of that money should be intentional.

Here’s the good news: It gets easier. After working at mindful consumerism for a while, thinking about the big picture becomes second nature. Specifically, you’ll think about the life you envision for yourself and whether a purchase or an action supports your financial goals.

(Donna’s two books have been praised by money experts like Clark Howard, Liz Weston, and J.D. Roth. Wealth of Geeks readers can buy PDFs of the books for just $4 each by visiting her payment platform and using the code MONEYGEEK1 for the first book and MONEYGEEK2 for Vol. 2. The platform accepts debit, credit, and PayPal.)