If this is the first post you are reading in this series, let me recommend you first read ‘Twelve Debts of Christmas‘ and ‘Family Holiday Ground Rules’. 

The third debt of Christmas is just that, debt. Anytime you have debt there are inherent issues.  The first is obvious, you don’t have as much money to save or spend because you must repay your debts. Unless you have $1,000,000.00, this pressure takes away the joy in many things. It never seems to have as much of an impact as at Christmastime. You want to buy your kid the toy they are asking for, but you don’t have the money…you would really like to go see your family, but putting a tank of gas per credit card on three credit cards to stay under the limit is daunting. You want to buy your co-workers some nice gifts, but when you go to the cash register you hope and pray as they swipe the card. If you haven’t been there, count yourself lucky. For most of us, at least once in our lives, we have been stretched too far and have concerns about our debt.

These concerns, particularly if you continue to repeat the same mistakes can cause a variety of health problems as well. According to an article titled, ‘High Debt Could Be Hazardous to your Health’  by Erin White, “A new Northwestern Medicine® study has found that high financial debt is associated with higher diastolic blood pressure and poorer self-reported general and mental health in young adults.” Is it really worth it? Christmas 2014 is almost in the books, but what about Christmas 2015, 2016, 2032…will you still be sweating it then? The answer is that unless you take steps to change, there will never be enough money and you will always be stressed out!

How much will you spend next year?

1. Start with how much you spent this year.
2. Put those numbers in this handy dandy Excel Holiday budget I created.
3. Once you finish with what you want to spend, then figure out how long and how much you’ll need to save.
4. Can you meet your spending goal through saving?
5. If the answer is yes, then skip to step 7! If the answer is no, then move to step 6 and repeat until you reach a balanced holiday budget.
6. You can’t save enough for what you want to spend. You have two options.
   1. Make more money by getting a second job or some other path.
   2. Cut your spending.
      1. From personal experience this is the better option. Working extra jobs will increase other stressors in your life and you’ll just end up replacing one stress with another.
7. Set your accounts to take care of it automatically and know that you won’t have to worry about it next year.
   1. We have a special account for this savings through Ally Bank. We use their checking account and the debit card that goes with it for Holiday spending. We also save for vacations and other fun things on this card so we can easily tell where we are on savings.
   2. If we fall off the wagon one month, because life happens, then we work to figure out a way to get back on goal or cut our expenses.
8. Now that you have your plan set, it may be good to share with your family members what you’ve done. You don’t need to announce it, but as someone mentions their stress, let them know that you’ve had to set your budget and stick to it. This will help them better understand, especially if this process will significantly impact your holiday gifting. You don’t want your kids to expect and ask for a $500.00 gift if you have $150.00 budgeted for their gift.
9. Pat yourself on the back! While it may not be an easy path, future holidays will have less stress and you can actually enjoy the holiday without the worry about how you will make it through January when all the credit card bills come due.

Remember, no amount of money will buy love…and in the end, that is the true spirit of the holidays. Its not about the amount you spend, but the joy that you bring to others lives…the spending is simply a way to show you care.

Tomorrow’s post will be about equity. This seems to be a real touchy subject in many families and one that is an important part of holiday stress!