Avoid Holiday Debt: Expert Tips & Strategies for a Stress-Free Season

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There's no need to resign yourself to holiday debt when there are ways around it.

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Key points

• A recent survey reveals that more than one-third of U.S. consumers are concerned about the potential for holiday debt.
• Learning how to say no could help you avoid debt in the course of covering your holiday expenses.
• Plan ahead for extra spending by creating a budget and taking on extra work temporarily.

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The holidays can be a fun time of the year, but they can also be stressful. That's because there's a lot of pressure to spend money -- in some cases, more than what you may be comfortable with.

In a recent Discover survey, 36% of respondents say the most stressful aspect of the holidays is the potential to go into debt. If you want to avoid that fate, here are some essential steps to take.

1. Set a budget for holiday spending

The last thing you want to do is rack up a huge tab on your credit cards this holiday season and carry it with you into the new year. If you want to avoid landing in debt, figure out how much you can actually afford to spend on the holidays and stick to that number.

Take a look at your paychecks and figure out how much holiday spending they allow for. Then, look at other income sources you might have access to.

For example, if you have money in savings that's not earmarked for emergencies, you could dip in to cover some holiday purchases. The key is to set a spending budget so you know your limits. And to be clear, that budget should cover everything from gifts to travel to the holiday cards you enjoy sending out.

2. Boost your earnings

The more income you have at your disposal, the easier it will be to cover your holiday expenses and stay out of debt. To this end, it could help to get a side hustle, whether it's working weekend shifts at a restaurant in town or inputting data on your laptop at night for a medical supply company. There are numerous options to choose from if you're looking to boost your earnings over the next several weeks.

3. Learn to say no

When it comes to celebrating the holidays and giving gifts, not everyone is on a level playing field. If your parents are pressuring you to come home for the holidays but you really can't swing a $400 plane ticket to make that happen, then you may need to firmly but politely put your foot down. It doesn't matter if your siblings will be flying in -- maybe they earn a lot more money than you, or have different expenses and obligations.

It's important to speak up about your financial comfort zone and constraints if you want to avoid landing in debt during the holidays. If friends are doing a gift exchange and you don't have an extra $50 to spend to join in, it's okay to decline. And if you can't afford to host a holiday meal like you normally would, tell your loved ones you need a year off and ask that someone else take over. Learning to say no to holiday expenses you're uncomfortable with could be your ticket to staying out of debt.

Many people rack up debt during the holiday season and regret it after the fact when they then spend months or years paying it off. These tips can help you avoid holiday debt so you can start off 2022 on a positive financial note.

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