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How to Have a Debt Free Christmas!

All too often Christmas time, the season of goodwill, becomes, instead, a period where waist lines rapidly expand and bank balances are, just as rapidly, diminished.

With so many people complaining about being out-of-pocket come the start of the new year, you could be forgiven for thinking that Christmas, despite relentlessly falling on the 25th of December every year, was an unforeseeable, unexpected event!

The truth is, though we all know its coming, most of us are simply unwilling to make the effort to take a few easy steps that could drastically cut down our holiday costs. However, there are some very simple measures you can take to ensure you’re not left with a big pile of debt under your tree.

Forward Planning

The average family spends somewhere between $800-$1,000 on their Christmas expenses, which, no matter how you look at it, is a big hit. Given that it’s an expense you know with 100% certainty you are going to incur, there really is no reason why shouldn’t start saving for it from the 26th onward.

Just think, even if you go for the higher figure of $1,000, spread out over the year you’d only have to put away $83.00 out your monthly outgoings to completely cover your Christmas expenses. By contrast, if you leave thinking about how to pay for the holidays until November you’ll need to find an extra $500 in each of the last two months of the year. The result? You’ll be more likely than borrow than go without, meaning you’ll be chasing down the interest on your credit card bills well into the next year.

Christmas Game Theory

No this isn’t about how to ensure your bird is cooked through. Game theory is the study of how people make decisions, especially when those decisions depend on what other’s will do but they can’t consult each other.

This is very relevant to gift giving as, due to social etiquette, people don’t tend to discuss what if they are going to get each other gifts or how much they’ll spend. As a result, you may worry that somebody will get you a gift and you’ll go out and get them one to. Indeed, they may have been thinking the exact same thing as you!

By simply talking to each other you can avoid unnecessary spending. They may sound a bit Grinch like, but think of it this way. If you by me a $30 book you’re not sure I want. just in case I’ve got you something, and I buy you a $30 scarf I’m not sure you’ll like, just in order to make sure I can reciprocate , in the end it’s as if we’ve each spent $30 on things we’d never have bothered to buy out of choice. Simply agreeing not to worry, or even just setting a limit can undo this dilemma.

Move the Day

Earlier in this article the point was made that, as Christmas falls on the exact day every year, you should have an easy time planning for it. However, one great way you can financially plan for Christmas is actually to move the day.

In general prices for consumer goods are at their highest during the build up to Christmas and then at the lowest immediately afterwards, in the January sales meaning, by waiting just a few vital weeks you can save a huge amount.

This doesn’t mean you have to miss out on the festivities of Christmas day.  Simply use a bit of creativity. You could write out an IOU for the present you intend to give, and present it wrapped in lovely way, so it will feel just as good as getting the gift, but roughly half as expensive.

Derik Sole is a writer committed to helping people avoid unnecessary expenses by being smarter with their money. You can read more of his tips over at Household Saver.

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