How to Have a Debt-Free Christmas
The Christmas season is fully upon us now that December is here. For many, that also means the anxiety of impending debt from all their Christmas purchases.
But it doesn’t have to be this way. Starting now, you can start saving for Christmas next year and have a debt-free, less-stress holiday.
There’s no magic formula for saving money, unless you get really lucky and inherit a fortune from a great-aunt who was rich. For the rest of us, it means digging in and making the little sacrifices it takes to start putting money aside.
Probably one of the hardest parts of saving is accounting for where your money is going. Saving requires a real commitment and if you aren’t even aware of how your money is being spent, there’s no real way to get ahead of it.
To fully commit to change you will need to do some deep soul-searching. Perhaps your guilty pleasure is Starbucks. It’s just a few dollars a day, right? Now take that times 365. There’s your Christmas funds.
Maybe you don’t indulge in the macchiatos. Maybe for you it’s eating out after a long day of work. Or stopping for a few drinks with your friends.
No matter the cause, it’s time to work on the solution. Here are some of the few ways we tend to let life nickle and dime us to death. Cutting back on just a few of these will make a big impact, big enough to start saving for next year’s Christmas, or whatever big purchases you have in mind.
Overpriced Coffee
This is the obvious first choice. There is always a line at our local Starbucks. You can almost see the dollar signs floating in the air right out of everyone’s pocketbook into their cash register.
What’s so great about overpriced coffee? Sure it tastes really good, but I think it has more to do with habit than anything else. It’s ridiculous but if I don’t set my coffee maker at night I am mad at myself for not having coffee first thing in the morning. It’s pretty much a necessity at this point to get my day started. And with so many of us on our way to work every morning, this is a great pick me up before starting the day. That’s a lot of change for a boost of energy that can be made at home.
Even investing in a quality coffee machine like this Ninja DualBrew will still save you long term. My son bought me this milk frother, a great way to make your coffee a little more special like the experts.
Eating Out
After working an 8/10/12 hour day, many of us are too tired to cook dinner. The last thing you want to do when you get home is work some more. But that fast food you picked up can set you back hundreds a month over the long run. Not to mention it’s terrible for your health.
I invested in a Ninja Air Fryer and Instant Pot and they were game changers. Throw your food in and forget about it until the timer goes off. Pinterest is full of 30 minute meal ideas and some of those have become our new favorites. This does require some effort, but the savings outweigh the labor.
New Clothes
When I started a new job the first thing I had to worry about was a new wardrobe. This job required me to dress more professionally and I came from a job where I wore jeans everyday.
I simply did not have the money to buy a bunch of new clothes. I stopped at my local Goodwill and was able to get a jumpstart on building a wardrobe capsule. If you’re unfamiliar with the term, it’s where you selectively purchase items that can be paired together in different combinations. Basic black pants can be paired with nearly everything. A white blouse can do the same.
Many people might scoff at the idea of purchasing clothing second hand. I’m not suggesting you shop from their intimates section (yuck), but picking up a few nicer items will supplement your existing clothing. And I frequently find name brand clothing for rock bottom prices. No one in your office will know you didn’t buy it new.
For extra mileage, shop at second hand stores in nicer neighborhoods. Rich people love to throw away really nice stuff.
If thrift shopping isn’t your thing, try to shop for items when they’re on sale. Most stores will have great sales during major holidays. Picking up a piece here and there when the timing is right will go a long way in building up your selection.
Impulse Spending/Not Meal Planning
Ever run out for one particular item and pick up a few extra things you saw on the shelf? It’s easy to justify if it’s just a few dollars, but what if you did that every time you went to the store? I’m guilty of it myself. It’s hard to quantify how much extra we spend on these little purchases, but they add up over the long term.
It’s time to start meal planning like it’s your job. Fifteen minutes a week is all it takes to plan out your meals and the savings are significant. Make a list of all dinners you plan on eating, as well as some breakfast and lunch ideas, write down all your needed ingredients and hit the store on a mission.
When you get to the store, take your list and keep your head down while shopping. I try to make a game out of it by seeing how fast I can get in and out of the store. The faster you go, the less you spend. Only get the items on your list and get the heck out of Dodge.
Retail Therapy/Emotional Spending
A bad day at work, a tough breakup, a fight with a family member. All of these prompt an emotional response that we don’t know how to fix. Sometimes you just want to feel better and buying something nice for yourself seems like a great way to meet that need. But it doesn’t last for long and the guilt of overspending might even make you feel worse.
Instead of going to the store to scratch that itch, try taking a walk to clear your head. Or make yourself a special dessert, take a long bubble bath, have a good cry, write in a journal. The urge to do something impulsive to stop your pain will eventually pass and you won’t have the added guilt of buying something you couldn’t afford.
Self-care doesn’t have to cost a fortune and can be done without the added stress of overspending.
Convenience Foods
Although convenience food seems like a good solution to eating out too much, the cost can also add up. Occasionally buying frozen mashed potatoes probably won’t kill your budget, but if those are staples in your home then your grocery bill will start feeling the pain.
There’s no need to buy already cut up meat, fruit or vegetables. You really aren’t saving that much time and instead you’re buying someone else’s time to do those things. If these types of activities really irritate you, try doing them in bulk. Better to cut up enough veggies for one week instead of doing it daily. Or make 2 batches of rice and freeze one. You’ll thank yourself when you grab that container of prepared food the next time you need it.
Cable
Paying the cable bill is one of my least favorite activities. I really don’t watch that much TV, yet I still stay connected to cable. I’ve tried switching to only Netflix or another streaming service, only to get sucked back into cable the first time I started missing a show.
Even on their cheapest plan of $120/month (not including internet), that’s over $1400 a year on something that is essentially background noise. To watch the one show I like, which is probably only on a few months of the year, I would be better off to subscribe to that one channel during the time it airs.
Seems like most shows are only running 10 episodes a season these days, so I’m paying for 3/4 of the year waiting for the next season to air.
I also have a smart TV that has a bunch of free streaming channels. If you don’t own a smart TV you can buy a Roku, Amazon Fire Stick or other streaming device and pick up a whole lot of free entertainment. Time to cut the cable. Again.
Cell Phones
I’m a techy person so I like gadgety stuff. Too often I get caught in the newest phone craze. Upgrading to the newest phone every 2 years is almost like an addiction.
It’s easy to be drawn into the flashy ads promising lightening fast speeds, professional photography quality photos and enough storage to house the Library of Congress. But we really don’t need all of that every 2 years.
When cell phone companies are ready to release a new version they will often discount their previous ones for a pretty good price. Most often you can trade in your old phone and get enough in credit to purchase the new (older) phone. You may even be able to get the latest version under the same promotion.
That’s how they suck you into the vortex, putting your contract on repeat for another 2 to 2.5 years. So they will still make their money off you.
Most people need a cell phone for daily use, so cutting it out completely isn’t feasible. However, there are a lot of great deals with prepaid cellular plans that use the same towers as the big guys. It might require you to use an older model or purchase a new one outright, but the long term savings benefits outweigh the sacrifice for the new shiny toy.
New Cars
Did you know you start losing value on a new car the minute you drive it off the lot? The truth is, a new car will lose approximately 15% to 20% of its value every year. That’s because you pay retail price at the dealership, but as soon as you buy it, your car is now worth the wholesale price, the price the dealer would buy it back.
A used car that is a few years old has already taken the big depreciation hit so you lose less. New cars are also more expensive to insure and you’re paying more in sales tax.
There are other factors to consider though, such as the higher repair costs as the car ages and warranties typically expire within that time frame. Dealers may also have outstanding incentives on new cars that make them more attractive, so do your research and make cost comparisons before purchasing.
Still undecided? Here are 10 reasons you should never buy a new car.
Late Fees/Overdrafts
Most banks will charge you a fee for transactions at a competitor’s ATM, and that ATM in turn will tack on more fees.
Do yourself a favor and try to make all withdrawals from your bank’s ATM or at a retailer that offers cash back. If I know I’m getting short on cash I will opt to receive cash back at the grocery store where I know there will be no additional fees.
Not keeping track of your spending can also cause overdraft fees to pile up. If you’re not paying attention to your true balance (not just the balance shown on the bank’s website or ATM), you may spend into the negative and be subject to high overdraft fees.
Influencer Purchases (Tiktok/Instagram)
I don’t know about you but I have a bad habit of watching reels on Facebook and Instagram when I’m bored. My favorite ones are the cleaning videos and I can become very susceptible to wanting to purchase the products they are advertising.
Watching those videos can be so satisfying, but there’s (literally) a price to pay if you fall into the trap. These influencers make money off affiliate marketing, which is not necessarily a bad thing. Just don’t let the appeal of those videos suck you into unneeded purchases.
Gym Memberships
I once paid $150 to lose 10 pounds. That was the total cost of my gym membership during the year. Although I was glad to lose the weight, I could have also done that for free at home.
YouTube is full of exercise videos that are just as effective as the treadmill or weight machines we are paying a premium to use. Matter of fact, the internet is full of tutorials on weight loss exercises.
Try one of these techniques before committing yourself to a monthly payment that more than likely won’t get used. Because once you’re locked into that contract, you can’t get out. And gyms love to add on hidden fees, like registration fees, maintenance fees, termination fees and other extras.
Subscriptions
In this digital age there is no end to the amount of subscription based services you can find. Streaming cable, streaming music, games, phone apps, food delivery, makeup delivery and Stitch Fix are just some of the many available services you could be doling out for monthly. Whether you’re buying data or a physical product, chances are you don’t really need it.
If you’re not careful about tracking your payments, it’s easy just to forget that you’re paying for these. Fortunately, there are apps to help you track all of that and get a handle on your spending. Rocket Money, PocketGuard and AskTrim are a few options, but these all come with their own expense.
If you’re truly looking to nail down your spending, I would suggest paying for budgeting software. My personal favorite is You Need a Budget (YNAB to us budgeting nerds). I have used them for over 10 years and had the most success with sticking to a budget with their software. I have also tried Quicken, Empower (Personal Capital), Mint and Simplifi.
While these are all great in their own way, YNAB is the only one that helped me change my habits. I have all of my regular bills set to add to my register monthly, so no more forgetting I have to pay the milk man once a month (yes, that’s a real expense).
Gambling
Nothing can ruin your credit faster than a gambling addiction. Casinos are banking on your hope of always trying to hit the big one. Sure, you might pick up the occasional winnings, but very rarely do you win big at gambling. Casinos wouldn’t still be in business if they were in the habit of giving away their money.
You don’t even need to leave your house to gamble these days. There are a lot of apps that can be just as addicting and the added convenience makes them even more attractive.
For many, a gambling addiction is the sign of a bigger problem and is a substitution for something else that is missing in your life. To beat this cycle, reach out to an addiction specialist and get the help you need.
Online Spending
The convenience of online shopping has changed the way we purchase. It is estimated that over 2 billion people shop online worldwide. That’s a staggering number considering almost the same number of people in the world are still not connected to the internet, with 1 in 5 not connected to the internet in the United States alone.
Along with the ease of shopping online, you also have the appeal of free shipping from many companies. Makes pressing the “submit” button oh so easy.
Online shopping can be a good thing when you use it to find good deals, but many times we purchase because it’s convenient, not because it’s necessary. When you have to change out of your pajamas to buy something it acts as a deterrent. But fire up the laptop and it gets a whole lot easier.
Alcohol/Nicotine
Americans spend approximately $276 billion a year on drugs and alcohol. Add on the additional costs for the resulting poor health and you have a multi-billion dollar business machine.
There’s nothing wrong with the occasional drink, but if stopping at your local pub every evening on the way home from work is a regular habit, you’re drinking your money away.
The invention of vaping has changed nicotine consumption. More than 2.5 million youth are estimated to use e-cigarettes in 2022. With their ability to be disguised, we have seen a rapid increase in nicotine consumption in school aged kids. The added convenience has made them a popular alternative to cigarettes, but you are still subject to the same health risks as traditional nicotine. Both forms can cost you up to $5000 a year, making them a very costly habit.
Eating Brand Name
I can’t really say I’m a food snob. Most of my adult life has been shopping at places like Aldi’s (which I LOVE) and store brands at the bigger stores. I guess my palate never developed a preference for name brands since we couldn’t afford them.
With the rising price of food, now is a good time to start sampling the “off” brands. It may not be the old favorite you’re used to, but over time you’ll adapt to the new taste. If going full generic isn’t a leap you’re ready to make, try swapping out a few brands at a time until you find a good substitute. Not sure where to start? Check out the truth about brand name versus store brand.
Grocery Shopping When Hungry
Any serious grocery shopper knows this is a rookie mistake. You are much more likely to pick up unnecessary snacks when your stomach is growling while you’re shopping. Suddenly everything on the shelf looks attractive and seems to find its way to your cart.
Try to eat a meal before heading to the store. Your brain will be in control instead of your stomach. Although we’ve all experienced the disappointment you feel when you’re snacky at home and your sensible side kept the treats out of the cart, you can be consoled by thinking of all the money you saved.
Shopping Sales and Using Coupons
At first glance, this looks like a misprint. Aren’t you supposed to shop for sales and use coupons? Well yes. And no. If you’re using them wisely, then they can be a very effective way of saving money. However, if you’re buying something simply because it’s on sale or you have a coupon, that makes it an unnecessary expense.
Most coupons are for convenience foods. Some retailers will have in-store coupons when you use their app and these can save you a lot of money. The catch is, most traditional coupons are mostly for boxed foods that you don’t need to buy.
I once got into serious couponing back in the days of actually purchasing a newspaper and clipping them out. I spent hours trying to match coupons to sales and wound up with a pantry full of food we never ate. That time could have been spent cooking meals from scratch and making my own convenience foods, a healthier alternative.
Disposable Items
Who remembers the great toilet paper shortage of 2020? I remember we went to Walmart one night and saw rows and rows of empty shelves and I got a very funny feeling in the pit of my stomach.
We are very dependent on our grocery stores carrying all of the items we have come to rely on daily. Although toilet paper is more a necessity than a convenience, we do spend a very large percentage of our income on disposable products. Water bottles, paper towels, plastic baggies and throw away containers are some of the many ways we throw away our money after a single use.
I’ve recently switched to these glass water bottles and I swear the water tastes better (weird, but true fact). I also bought some better quality glass food storage containers that no one is allowed to take leftovers home in (don’t judge me).
I don’t know if I could completely stop using paper towels, but making a few switches here and there has a long term impact on my budget and the environment. Grandma would be proud to see me washing the tinfoil.
Makeup/Personal Care Products
I have curly hair that sometimes hates me. One day it looks fabulous, the next I look like Medusa. Any curly girl will tell you that a good product goes a long way to having a good hair day.
The problem lies in the fact that good hair care is expensive. Same with makeup. You can argue that quality is worth the additional expense, but that doesn’t help you save money.
Sometimes you have to suck it up and accept the bad hair day (or use a flat iron). Or stretch your makeup out a little longer. Going without these things completely isn’t really a feasible solution, but you can lessen the blow to your pocketbook by keeping your standards a little lower, at least for a little while.
If you’re desperate for a little relief, try using these homemade hair care products. Many of these are products you probably already have on hand. And because they’re organically made, your hair will be better off in the long run.
While this list is a little long, I could probably continue to write another one double this length. Saving money can be a creative challenge if you’re up for it. The best way to start identifying these little money suckers is to start recording your purchases. A good budgeting software will pay for itself many times over.
My personal recommendation is You Need a Budget (YNAB). There are many good ones on the market and some are even free. Unfortunately, Mint has gone by the wayside recently but Google sheets has built in budget templates and Empower/Personal Capital is free to use.
If you can’t afford the paid options, start with a free one until you’re ready to take things to the next level. No matter which method you choose, just get started and watch the savings start to roll in.
What’s your favorite way to save or budget?
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