Are you looking back over your credit card bills and realizing that you went a little overboard with your spending?

This is a common affliction after the holidays end and a new year is underway. If you want to break out of the cycle and avoid holiday debt next year (and in the years to come) it makes sense to plan ahead.

Kevin Gallegos, a financial expert with Freedom Financial Network, offers some helpful hints for avoiding holiday debt next year:

Develop a Holiday-Specific Budget

The best thing you can do is develop a holiday budget and stick to it. “Calculate how much you can and want to spend for holiday festivities and write it down,” suggests Gallegos. “You can do this as early as January.” He says that you should include the following items in your calculations:

  • Everyone you’ll give a gift to, and how much you’ll spend on each.
  • Cards and postage, if applicable.
  • Decorations.
  • Entertaining, including food, drink, special clothing, child care, and other costs that come with throwing and attending parties.
  • Year-end tips for newspaper carriers, babysitters, housecleaners, delivery drivers, and other service providers.
  • Gifts for teachers, neighbors, and others who are close to you.
  • Travel expenses.

Figure it all out so that you know what to expect. You can use the spending from the holiday season just past as a guide.

How to Avoid Holiday Debt Next Year“When putting your budget together, give what you can afford and do not go into debt,” cautions Gallegos. “Do not give what your sister-in-law believes she deserves. Give reasonably, with a generous smile.”

He also suggests that you be creative. If you know you can’t afford a lot of expensive gifts, you can offer homemade gifts, or gifts of time and effort, instead of those that cost a lot of money.

Allocate Holiday Spending in Your Household Budget

Take what you plan to spend, and divide it by a number that makes sense. Gallegos suggests 12, but it might make more sense to divide it by 10 so that at the end of October, you’ll have what you need for your holiday shopping already in the bank.

“You can either save it, but putting it into a money market account, or use some each month to get ahead of the curve,” says Gallegos.

Keep Track Throughout the Year

Now that you have a list of what you need for the holidays (including gifts), you can shop throughout the year, using money you set aside for that purpose. “Keep a copy of your list in your purse or wallet,” says Gallegos. You can also use your smart phone as a list manager. Do whatever works for you, and what is likely to help you keep everything straight. “When you see the right gift at the right price, check it off your list and stop shopping for that person.”

Studies indicate that shopping during Black Friday and the rest of the holiday season might not be the best option for the best prices anyway. There are many times throughout the year that you can get the same deals — or better deals — on many of the things on your holiday shopping list. Break out of the mindset that says you have to buy during the holiday season.

At home, a dedicated space for gifts and other holiday items can help you keep everything organized. Make sure that you record everything, and that your money is shifted around between accounts to reflect the holiday purchase.

“Remember that nothing is more important than protecting your physical, mental, emotional, and financial well being,” Gallegos says. “Finances contribute significantly to holiday stress, so if you safeguard your budget, you’ll make it through the holidays with less stress and a clearer conscience.”



Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.