Stay Debt Free This Holiday Season
- For most of us, a debt-free holiday season requires planning.
- Set a budget ahead of time and give yourself lots of time to do your shopping.
- Save money for the holidays specifically, and boost your income with a side hustle if needed.
Table of Contents
One nice thing about the holiday season is that it arrives at the same time each year. In other words, you can plan for the holiday season year-round. You don't have to save your shopping for the last minute, and you don't have to save your savings for the last minute.
In 2024, 36% of Americans took on debt during the holiday season, according to Lending Tree. And those who landed in debt racked up an average amount of $1,181. Taking on that extra debt can lead to a need for post-holiday debt relief.
You can have a debt-free holiday season—the key is to have a plan. Here’s what that might look like.
1.Create a Holiday Budget
One reason people end up with holiday debt is that they spend money without adding it all up, so it’s important to create a holiday budget well ahead of December. That way, you know how much money you’ll need to celebrate the holidays the way you want to while covering your costs in full.
Your holiday budget should account for expenses that may include:
Gifts
Decorations
Travel
Greeting cards
Parties (ones you host and ones you attend)
New attire
Family photos
Family activities (think making gingerbread houses, and other small things that could add up)
Once you have a sense of how much you may spend, you can start saving money.
2. Take Your Time Doing Your Shopping
If you save all your holiday shopping for the last minute, you may not only get stressed, but wind up overpaying for some of the most important things on your list. That could leave you with a sky-high credit card balance.
If you want a debt-free holiday season, start your shopping as soon as you’ve made your budget. And ideally, give yourself a good number of months to get it done. That way, you can track prices, do some comparison shopping at different retailers, and see where you can find the best deals on the things you want the most.
3. Build Savings Specifically for the Holidays
If you have an emergency fund, you don’t want to dip into it to pay for holiday purchases. You need that money for unplanned expenses like a leaky roof or medical bills. Instead, open a dedicated bank account for the holidays so you don’t commingle your holiday and regular savings.
Once you know what your holiday budget looks like, save toward that goal by cutting back in other spending categories where possible. You may even want to set up an automatic transfer so that some of your earnings land in your dedicated holiday savings account off the bat each month. But only do this if you can also cover your essential bills and set money aside for important things like emergencies and retirement.
4. Boost Your Income with a Side Job
If you’re worried you won’t save enough out of your paychecks for a debt-free holiday season, a side hustle could come to your rescue. The good thing about planning for the holidays early is that you have time to pick up a side job without pushing yourself beyond your limit working too many extra hours in too short a time frame.
Say you run the numbers in early July and realize you’ll need $2,400 to cover your holiday costs in full. But you only expect to save $200 a month from your paychecks, or $1,200 in total. You need the remaining $1,200 to come from somewhere. If you pick up a side hustle mid-year, you may only have to work a few extra hours each week to meet your savings goal, as opposed to 10 or 12 hours in the weeks closer to the holidays.
Enjoy a Debt-Free Holiday Season
Planning for the holidays ahead of time could be your ticket to enjoying them to the fullest without racking up debt in the process. While holiday debt is pretty common, it can add stress to an otherwise joyous time of the year. But if you set a budget in advance, give yourself plenty of time to shop, and save enough to cover your expenses, you can pull off the debt-free holiday season you deserve.
Insights into debt relief demographics
We looked at a sample of data from Freedom Debt Relief of people seeking debt relief during July 2025. The data provides insights about key characteristics of debt relief seekers.
Age distribution of debt relief seekers
Debt affects people of all ages, but some age groups are more likely to seek help than others. In July 2025, the average age of people seeking debt relief was 52. The data showed that 22% were over 65, and 15% were between 26-35. Financial hardships can affect anyone, no matter their age, and you can never be too young or too old to seek help.
Home-secured debt – average debt by selected states
According to the 2023 Federal Reserve Survey of Consumer Finances (SCF) (using 2022 data) the average home-secured debt for those with a balance was $212,498. The percentage of families with mortgage debt was 42%.
In July 2025, 25% of the debt relief seekers had a mortgage. The average mortgage debt was $236504, and the average monthly payment was $1882.
Here is a quick look at the top five states by average mortgage balance.
| State | % with a mortgage balance | Average mortgage balance | Average monthly payment | |
|---|---|---|---|---|
| California | 20 | $391,113 | $2,710 | |
| District of Columbia | 17 | $339,911 | $2,330 | |
| Utah | 31 | $316,936 | $2,094 | |
| Nevada | 25 | $306,258 | $2,082 | |
| Massachusetts | 28 | $297,524 | $2,290 |
The statistics are based on all debt relief seekers with a mortgage loan balance over $0.
Housing is an important part of a household's expenses. Remember to consider all your debts when looking for a way to get debt relief.
Manage Your Finances Better
Understanding your debt situation is crucial. It could be high credit use, many tradelines, or a low FICO score. The right debt relief can help you manage your money. Begin your journey to financial stability by taking the first step.
Show source
Author Information
Written by
Maurie Backman
Maurie Backman is a personal finance writer with over 10 years of experience. Her coverage areas include retirement, investing, real estate, and credit and debt management.
Reviewed by
Kimberly Rotter
Kimberly Rotter is a financial counselor and consumer credit expert who helps people with average or low incomes discover how to create wealth and opportunities. She’s a veteran writer and editor who has spent more than 30 years creating thousands of hours of educational content in every possible format.
Are holiday loans a good idea?
Usually, no, borrowing for the holidays is not a good idea. One reason is that most loan terms are longer than one year. So you’ll already be looking to spend money on the holidays again before last year’s holiday loan is paid off.
How do you get out of holiday debt?
There are different ways to get out of holiday debt, including:
Use a repayment plan like debt snowball (from lowest to highest balance) or debt avalanche (from highest to lowest interest cost).
Consolidate debt with a loan or use a credit card that offers balance transfers at 0% APR.
Cut costs and put the money toward your debt.
Get a second income until you pay off debt.
How much should I spend on Christmas?
Your Christmas budget depends on your available money and what's important to your family. You can set aside a small percentage of your income for Christmas spending. You could consider allocating around 1% of your annual before-tax income. It’s more important to select an amount you can comfortably spare without getting into debt. Then, make a spending plan for your holiday expenses and start saving for Christmas.