Here are the 5 steps you need to take to stop yourself from overspending on Christmas gifts

The excitement, the gingerbread latte is now kicking in … the click-clack of your shoes racing down Target’s floor tiles… as you frantically snatch the must-have toy of the season off the shelf, clutching it possessively to your chest!  

VICTORY!

As you round the corner trying to get back to the main aisle, you can’t believe your eyes; you haven’t seen this Magnolia item in stock in FOREVER! In your shopping cart it goes! Off to checkout, and you slooooow way down going by the girl’s section, and think, “That’s super cute! My little one would love that!” It too goes in the cart!

An hour later, and your phone bings at you. Yup, it’s a large purchase amount alert from your credit card. It reads, “Did you spend $358.42 at Target? This amount is over your alert limit notification settings”.

And just like in The Christmas Story, you say (in slow motion for dramatic effect) “Oh FUDGE!”

You totally overspent! Again! You told yourself you weren’t going to overspend on Christmas presents again! (like ever!) Last year’s holiday credit card bill left you with hives, and you promised yourself that this next year would be different!

Well, guess what, that Target scenario up above… it was just a dream. Just like Ebenezer, there is time for you to change your ways. You’re not doomed to follow the same path you did last year! So if you’re ready, let’s dive into how to stop overspending at Christmas!

how to stop overspending on christmas presents

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What is the Christmas Debt Hangover?

Ugh! No one likes a hangover! But unlike a hangover from too much bubbly, a Christmas debt hangover can last months and months (sometimes years)! No thanks!

According to a MagnifyMoney survey, “Americans took on an average of $1,325 of holiday debt in 2019”. Here’s how their numbers played out…

  • 44% of consumers took on debt this holiday season, and the majority (57%) didn’t plan on doing so.
  • 78% of those with holiday debt won’t be able to pay it off come January, including 15% who are only making minimum payments.
  • 58% of indebted consumers are stressed about their holiday debt.
  • 40% plan to consolidate debt and/or shop around for a good balance transfer interest rate, but more than half won’t even try. Of those that won’t try, 20% think it’s not necessary, and 18% don’t want to deal with another bank.

Now specifically regarding how long it would take them to pay off the debt, survey responders said…

  • 22% said one month
  • 21% said two months
  • 19% said three months
  • 8% said four months
  • 16% said 5+ months
  • 15% are paying only minimum payments

Right now, The Fed Reserve lists the average credit card interest rate to be 14.52%. You can generally assume that your minimum payment will be about 2% of your total bill. Here’s a screenshot of how long it would take to pay off the card (if you didn’t put any more purchases on it).

magnify money debt calculator
using Magnify Money’s credit card debt calculator

64 months? Paying $582 in interest? W.T.F.!

Are you ready to tame your shopping spree beast? Because, after looking at those numbers, overspending at Christmas is not cool!

How to stop overspending on Christmas presents: Step One – decide what you will focus on besides the gifts!

It’s just smart sense that when you take something away, you need to replace it with something else. Instead of a donut, have a whole grain muffin!  

So instead of focusing on gifts, what do you want to spend the season focused on? I’ve got a great list of frugal family fun ideas for the holidays!  These are bucket list items perfect for the holiday season!

You’re especially going to need something fun to do Christmas morning, as you don’t want the day to be anticlimactic without all the presents, as it might be hard on our littlest ones. Think about…

  • Doing a Meals on Wheels delivery route in your neighborhood.
  • Go caroling.
  • Do a Christmas movie marathon (pj’s required!).
  • Make a full holiday meal together as a family.
  • Go sledding/skiing/ice skating or go to the mountains for snow time fun! Don’t forget the hot cocoa and accessories for the snowman you’ll build!

Step Two – Consider a gifting strategy

Every good General knows that you need a plan of attack or a strategy, shall we say. And if you don’t think Christmas shopping is kind of like preparing for battle, then hats off to your peaceful and serene holidays of the past. The rest of us battle-weary moms can barely nod in agreement (as we’re still a little shell shocked from last year’s holiday season).

Strategy One – Adopt the 4 Gift Rule

This one is amazing in its simplicity to help you stop overspending on Christmas gifts! It caters to those toying with the idea of having a minimalist(ish) holiday, and it’s gaining popularity every year! You gift each recipient (that you would typically buy lots for) just four gifts.

  1. Something to wear
  2. Something to read
  3. Something they need
  4. Something they want

I’d like to think of it as a way to buy a more meaningful selection of gifts. As you’re looking not just to buy lots of things, but purchase specific items. Hopefully, the receivers will appreciate their gifts a little more and not get lost in the craze of ripping off wrapping paper at the speed of light.

Don’t forget to snag your printable gift list tracker; there’s a four gift rule one and then a classic gift list printable. Everything you need to stay organized and on budget!

christmas gifting list

Strategy Two – Give the gift of an experience

Maybe your kids have everything that they need! Maybe you are dreading anything more coming into your home as you need to get your Home Edit on right now!

If that’s the case, then consider giving an experience instead. This could be a short trip to the beach or a big trip to Walt Disney World. Or tickets to a sporting game or an event like Comic-Con. Go as big or as small as you like. Set aside the Christmas money and put it in a sinking fund to make this experience come true (even if it’s at a later date).

Hint: if it’s a trip to a theme park, some have vacation planning DVDs or online videos (DisneyWorld does). This would be a great thing to wrap and put under the tree!

Strategy Three – Go the D.I.Y. route

Now, this isn’t for those of us that are all thumbs (meeee!) I am not a crafter/knitter/artist/DIYer by nature. But for those of you that are, consider harnessing your talent for homemade gifts!

Even if you don’t have a talent, maybe consider gifting a custom photo book from Shutterfly. Or collect great grandmothers family recipes together and turn them into a little book (or place her most famous recipe on a tea towel! Cute huh!)

Step Three – Do your shopping early!

That’s right, as your mother always said, it pays to plan ahead! That means getting your Christmas present shopping done early! As the holiday gets closer, we tend to panic slightly; we grab just about anything that will do as a good gift. Most of the time that means we’re spending a little more (because we don’t want to get a cheapo lame gift)!

So start jotting down your gift choices now! Aka ASAP! I.e., immediately!

Okay, you get the drift. Besides, online ordering gets bigger every year, and sometimes there are shipping delays or snowstorms that stop service in half the country (yikes!) You don’t want to get a substitute gift because your original gift won’t be back in stock until January 17th!

Christmas Budget Workbook mock up

Step Four – Use Cash

They say cash is king, and they’re right! Especially when it comes to spending money. Because when the cash is out, the spending is done! It’s genius at its most basic, and it works every time (as long as you leave your credit cards at home). You simply cannot overspend on Christmas gifts!

Using cash envelopes is a strategy used by many successful budgeters! Besides, stuffing these cute festive holiday cash envelopes is fun! You can use one for each person you’re gifting to or use one for each holiday shopping category—I.e., food, decorations, gifting, fun times, supplies, etc.

Nerdwallet references a cult classic report where, “An often-cited study is one conducted by Dun & Bradstreet, in which the company found that people spend 12%-18% more when using credit cards instead of cash.”

Don’t forget that when you pay with cash, you won’t have to pay interest on the charge either! Look at it this way; when you pay cash, you’re buying something. When you pay with a credit card, you’re borrowing the money for it; you didn’t buy it (but you’ll pay extra for it in interest!)

Step Five – Don’t go into the stores!

This one sounds silly, I know, but it’s so painfully obvious. If you don’t have to go into a store, then don’t! Because really, we’ve all gone into a store, we don’t grab a cart because we just need one thing, and we come up to the cashier juggling items like a clown!  

Inevitably when you go into a store, it’s straight temptation. Why do that to yourself? Stay home, and send someone else to the store, or better yet, do some online ordering for that item you need!

Or if you’re poison is the 1-click buy, then take some super easy preventative measures. Delete your credit card info on your devices! GASP! I know, I know, it sounds drastic, but making it just the teensiest bit harder on yourself to shop online could mean saving hundreds! Because honestly, sometimes I don’t get up to walk across the house to grab my credit card number!

Better yet, do a marketing edit! Unsubscribe from those pesky emails from your favorite retailers and unfollow them on social media! You won’t want what you never see! Now, I know you’ve been thinking about this idea for a while, give it a try! You can always go back later and subscribe again!

Simple hacks to stop overspending on Christmas presents

Know your prices

Do you know the regular price of the “sale” item in your hand? Even though it says it’s on sale or discounted 20% off, it might still not be a great price! If you are 100% in on saving money this holiday season, then you should scout your gifts early, record their prices, and wait to see what the “holiday deals” actually are.

Many retailers change their prices regularly. What was $59 in September could easily now be $75 in December. Yet now they can mark it being 20% off! They get to keep their sales margin high enough to get a good profit, and you (the customer) feel like you got a good deal. Winner Winner… oh wait, that’s a bull$hit dinner!

Be smarter than the retailer!

Don’t go shopping when…

  • You are hungry
  • You’re short on time
  • With somebody else (friends can be bad influences, sorry friends)
  • It’s going to be super crowded (instead go early in the morning, or late at night)

Next years plan for Christmas gifting

If you get through this Christmas and going low key on gifts wasn’t for your family, then no problem. You can have the Christmas that your family wants; you may need to start socking away money for it a bit earlier than usual! Check out How to Start a Christmas Savings Plan and How to Plan the Perfect Christmas Budget!

At the end of the day

I know that reading about how to not overspend at Christmas sounds like a bummer of a topic. But honestly, think about how you’ll feel come January when you don’t have that big fat credit card bill that’s knocking out your wallet like it’s Balboa in Rocky 1!

I know that for many of us, we remember Christmases of youth, with mountains of presents, and we want to recreate those warm fuzzy memories for our own kids. But those warm fuzzy feelings can be created out of so many instances, not just present opening. So save yourself the agony and angst of overspending at Christmas, and don’t even go there!

Christmas Budget Workbook mock up

What are your top tips for how to stop overspending on holiday gifts ?