Stay Debt Free This Holiday Season
- A debt-free holiday season starts with setting up a spending plan in advance.
- Start a shopping list well before the holidays to help you compare prices and stick to a budget.
- To skip debt, consider a dedicated holiday savings account, and possibly a short-term side job.
Table of Contents
- 1. Create a Holiday Budget
- 2. Shop Early and Compare Prices
- 3. Pay With Cash or a Debit Card, and Consider Envelope Budgeting
- 4. Set Limits and/or Give Experiences
- 5. Build Savings Specifically for the Holidays
- 6. Host a Potluck, and Set Expectations Early
- 7. Boost Your Income With a Side Job
- Enjoy a Debt-Free Holiday Season
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These debt-free holiday tips cover how to set a budget, save ahead of time, and shop with a solid plan and avoid a last-minute scramble.
1. Create a Holiday Budget
It’s easy to end up with holiday debt, because it can be easy to spend during the holidays without adding up everything. A holiday budget created well ahead of the season helps you cover your costs and celebrate the way you want to with less debt (or none at all).
Your holiday budget should account for expenses such as:
Gifts
Decorations
Travel
Greeting cards
Parties (ones you host and ones you attend)
New attire
Family photos and activities
A written list, even a short one, makes it easier to catch expenses you might otherwise forget, like shipping fees or postage for cards. Once you have a sense of how much you might spend, you can start saving money for the days ahead.
2. Shop Early and Compare Prices
Last minute holiday shopping leaves less room to find good deals. With a time crunch, you might end up overpaying for important things on your list. That can leave you with a sky-high credit card balance.
If you’re aiming for a debt-free holiday season, start shopping as soon as you set your budget, and if you can, give yourself several months to finish. That way you have time to track prices, compare retailers, and find the best deals. Price-tracking tools and retailer email alerts make it easier to know when an item drops to its lowest price of the season.
3. Pay With Cash or a Debit Card, and Consider Envelope Budgeting
Cash and debit cards make it harder to overspend, because what you have on-hand or in your account is all you can spend. Some shoppers separate their budget by recipient with the envelope method: Put cash for each person's gift(s) into a labeled envelope, then track purchases and the running total on the outside of the envelope.
Another option is using a debit card linked to a holiday savings account.That way, every purchase pulls straight from money set aside for the season.
4. Set Limits and/or Give Experiences
If your family or friend group tends to spend a lot on gifts and buy for everyone, consider using a name draw or Secret Santa setup instead. That narrows your list so that each person buys for just one or two people instead of many. A dollar limit per gift can keep everyone's spending predictable.
Additionally, a shared activity, home-cooked meal, or a few hours spent together often carries as much meaning as a wrapped gift. A day trip, a game night, or a batch of baked treats gives you something to plan around instead of something to buy. A charitable donation made in someone's name is another low-cost option that still feels personal.
Talk with the people on your list before the season starts so everyone agrees to the same approach, since a name draw or spending limit only works when the whole group is on board.
5. 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, since it’s 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. A separate account also makes it easier to track holiday progress at a glance, without checking it against your regular balance.
Once you know your holiday budget, save toward that goal by cutting back in other spending categories where possible. If your essential bills are covered and you can still set money aside for emergencies and retirement, consider an automatic transfer that moves some of your earnings into your dedicated holiday savings account each month.
6. Host a Potluck, and Set Expectations Early
A potluck spreads out the cost of a holiday gathering so no single host covers every dish, drink, and decoration. Ask each guest to bring one item, and the meal comes together with a smaller grocery bill for everyone involved. A potluck also means less time in the kitchen and more time with the people you invited.
The same idea works for gift-giving traditions. Tell family and friends early on that you're scaling back this year, whether that means a lower gift limit, fewer stops on the holiday travel schedule, or a simpler dinner menu.
Most people are managing their own holiday budgets, too, and an early conversation gives everyone time to adjust their own plans accordingly. A holiday tradition changed by choice, with everyone informed ahead of time, may feel like relief rather than a letdown.
7. Boost Your Income With a Side Job
If you're worried you won't save enough from your paychecks for a debt-free holiday season, a side job could help close the gap. A few extra months of planning could make it possible to pick up a side job without packing work hours into the weeks right before the holidays. Options like seasonal retail work, pet-sitting, or freelance gigs are common ways to pick up extra hours without a long-term commitment.
Enjoy a Debt-Free Holiday Season
Planning ahead could help you enjoy the holidays fully without adding new debt. Holiday debt is common, and it often adds stress to an otherwise joyful time of year. Set a budget in advance, give yourself plenty of time to shop, and save enough to cover your expenses. Together, these habits could help make a debt-free holiday season possible.
Debt relief stats and trends
We looked at a sample of data from Freedom Debt Relief of people seeking debt relief during September 2026. The data uncovers various trends and statistics about people seeking debt help.
Credit card tradelines and debt relief
Ever wondered how many credit card accounts people have before seeking debt relief?
In September 2026, people seeking debt relief had some interesting trends in their credit card tradelines:
The average number of open tradelines was 14.
The average number of total tradelines was 26.
The average number of credit card tradelines was 7.
The average balance of credit card tradelines was $15,142.
Having many credit card accounts can complicate financial management. Especially when balances are high. If you’re feeling overwhelmed by the number of credit cards and the debt on them, know that you’re not alone. Seeking help to get out of debt can simplify your finances and put you on the path to recovery.
Personal loan balances – average debt by selected states
Personal loans are one type of installment loans. Generally you borrow at a fixed rate with a fixed monthly payment.
In September 2026, 44% of the debt relief seekers had a personal loan. The average personal loan was $10,718, and the average monthly payment was $362.
Here's a quick look at the top five states by average personal loan balance.
Personal loans - by states
| State | % with personal loan | Avg personal loan balance | Average personal loan original amount | Avg personal loan monthly payment |
|---|---|---|---|---|
| Massachusetts | 42% | $14,653 | $21,431 | $474 |
| Connecticut | 44% | $13,546 | $21,163 | $475 |
| New York | 37% | $13,499 | $20,464 | $447 |
| New Hampshire | 49% | $13,206 | $18,625 | $410 |
| Minnesota | 44% | $12,944 | $18,836 | $470 |
Personal loans are an important financial tool. You can use them for debt consolidation. You can also use them to make large purchases, do home improvements, or for other purposes.
Support for a Brighter Future
No matter your age, FICO score, or debt level, seeking debt relief can provide the support you need. Take control of your financial future by taking the first step today.
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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.
Frequently Asked Questions About Debt-Free Holidays
Are holiday loans a good idea?
A holiday loan is usually not a good idea. Most loan terms run longer than a year, so you could end up making payments on last year's holiday loan while trying to cover this year's costs too.
How do you pay off holiday debt?
A few strategies help you pay off holiday debt:
Use a repayment plan such as debt snowball (paying the lowest balance first) or debt avalanche (paying the highest interest rate first).
Consolidate your balances with a loan, or move them to a credit card that offers a 0% APR balance transfer.
Cut a few costs and apply the savings to your balance.
Pick up extra income until the debt is paid off.
How much should I spend on the holidays?
One guideline is to set aside around 1% of your before-tax annual income for holiday spending. If you and your partner earn $125,000 per year together, that would be a $1,250 budget. The right amount for your family depends on your budget and priorities, and the most important thing is to choose an amount you're comfortable setting aside without adding to your debt. From there, build a spending plan for your full list of holiday expenses and start saving for Christmas or other holidays.