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How to Handle Christmas Gifts When You’re in Debt

A couple of years ago, we were in the middle of a huge push to pay off our credit card debt once and for all. Then, the holidays rolled around. No, this joyous time of celebration did not make us happy to deck the halls and start singing about reindeer. We had gotten into the habit of not spending, and now it was time to think about holiday shopping. In the past, we bought gifts for most all of our family members, but spending a few hundred dollars on gifts is not the smartest move if you want to kill the beast that is consumer debt. This is my plan for handling Christmas while in debt.

Slash Your Gift List

There is no rule that you have to buy a gift for everyone you know or are related to, but if people assume you are buying something for them, they will probably get something for you. You might feel awkward if you show up with nothing, so make sure you tell people ahead of time that you’d rather not exchange gifts this year. You can share your debt story or not. Either way, there are tons of reasons you can use from we don’t need anything to we don’t have space to pack extra gifts, we are donating to charity this year, or we just think it’s silly to buy so many gifts.

In my experience, this goes one of two ways. In most cases, people are relieved. That’s one less gift they have to buy, and honestly, were your gifts in the past so great that anyone might miss them? My family called me a scrooge because they don’t do well with change, but eventually they got over it. My Mom and Dad still give us gifts, and we usually give them pictures of our daughter in return. They actually like that better than a gift card or other random gifts we’ve given over the years.

What About the Kiddos?

Even in debt, I think you have to get Christmas gifts for your kids, especially younger ones. They didn’t get you into debt, and they shouldn’t feel like they weren’t good enough for Santa to bring them presents. However, you don’t have to get each kid a new iPad or flat screen TV.

Little kids could care less where their stuff comes from, so it’s easy to buy used or from Ebay. You could also buy lots of cheap things like crayons, coloring books, small toys, tape (yes, my daughter thinks a roll of tape is the best gift ever), or art supplies and wrap them individually. Quantity trumps quality with younger kids.

For older kids, especially if they are teenagers, I highly recommend explaining your debt journey to them. You don’t want to scare them or make them feel guilty, but there is no reason why they can’t see what happens when parents run up debt loads. Shannon at the Heavy Purse has some great ways to talk to your kids about financial matters if you need help.

You can give older kids a budget and let them pick out something reasonable. You could also offer them an experience instead of a ton of gifts under the tree. It might be more fun and affordable to pack up the family and stay at a hotel for a night in the city. You could look at Christmas lights or go ice skating. Many zoos or museums have displays that are discounted or free on certain days. You can get creative. As a kid, I always remember experiences way more than some gadget I got for Christmas. Regardless, having a discussion about why you are choosing not to spend as much money this year will go a long way for your older kids. Even if they act like bratty teens now, the lessons will stick with them and hopefully, they will avoid your mistakes when they are old enough to make their own financial decisions.

Be Smart If You Must Buy Gifts

I realize that there are some gifts that you may have to purchase. To me, it really defeats the whole purpose of the season to feel like I have to buy a gift, but it isn’t always advisable or practical to tell everyone you are deep in debt and won’t be buying anything this year. If you do feel like there are some people you can’t leave off your list, at least plan ahead and have a set spending limit. Don’t wait until the last minute to shop when you might be overwhelmed and tempted to spend more to get it over with.

Also, don’t put any more debt on credit cards. If you must spend money, find a way to earn more or spend less for your normal expenses until you can make up for the excess.

Lastly, if you do fall off the wagon and rack up some debt this holiday season, don’t give up. Don’t let this setback be an excuse to go back to your old spendy days. Get back on track as soon as possible and start making plans now for next year so you won’t be in the same situation.

What are your tips for buying Christmas gifts while in debt? Do you buy gifts for every family member? 


About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.


  1. Every Christmas I always have a gift for my family, I really love doing that. I love to see the smile in their faces and the never ending thank you’s. :)
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  2. My entire family exchanges gifts so it can be quite expensive. I would say the best thing you can do is set a budget and stick to it. It’s way to easy to spend WAY too much on Christmas gifts without a budget.
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  3. My siblings and I draw names for each other so that we can get each other a decent gift instead of 6 cheap things. And for my kids, they get so much stuff from aunts/uncles/grandparents/great grandparents that we usually just get them a couple of small, useful things for now. Once they get bigger I’m sure that will change, though. :-)
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  4. We had to cut back one year a few years back as it was when Nicole had first left her job and I had taken a salary reduction at work. It was one of our best Christmases ever. We bought a number of gifts for the kids and that was about it. We just set ourselves a smaller budget and it worked out just fine. That said, we do exchange between family members but will likely see that change in the near future.
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  5. I am always so relieved when a family member suggests that we stop buying gifts for each other. Nobody has enough money to buy every single person in the family a gift. I try to start early and keep a budget for each person in mind. The only trouble I have is not going overboard with my kids. Seeing their expressions when they open presents on Christmas morning is priceless!
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  6. I think giving time is awesome. If you have nieces or nephews, an afternoon taking them for a picnic or to the zoo is probably a wonderful gift to them (and to mom and dad who would surely love the free afternoon!).
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  7. Christmas gift giving can be stressful. We don’t really give gifts anymore within our family and friend groups. I give my wife a gift and my parents cash. I used to give them gifts but they are hard to shop for and they would tell me that I was wasting money. They’re very practical people and prefer it that way, so it’s fine with me. I think it’s hard to give gifts to adults because who knows what they want. To be honest, if you ask me what I want, I couldn’t tell you. There really isn’t any gift I want that someone can buy me. Maybe I’m practical and frugal like my parents. Definitely different for the kiddos though…although my son will only be about 5 months so he’d probably prefer to play with the box rather than any toy we buy him.
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  8. Excellent post - your point about many people being relieved they don’t have to buy for others is so very true. Ahem, I, however, am not one of those people… it drives my spouse mad how easily I find excuses to buy gifts for people, haha. I think part of it is making up for lost time when I was a student and had no money.
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  9. Great post Kim! You know when I look back when I was a kid (we didn’t have money issues) I just really wanted to do Christmasy thing and have my family be in tact, which wasn’t always the case, hence my not-so-liking of Christmas. But if a family is struggling, what’s worse? Seeing mom and dad unhappy and stressed, or doing frugal things and having fun as a family? I do think kids are the exception when buying some gifts. They don’t know better, but I hate hearing when adult family members or friends make someone feel guilty about not buying gifts. That’s so rude! Luckily I don’t feel that obligation and like you, I send pictures and try to do other things that mean something to them without busting the budget.
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  10. Great post, Kim and thanks for the mention. I appreciate it! And I love that your daughter loves tape. The things kids love can be so fascinating! As excited as I was a child to open presents, the truth is I can barely remember the various toys I received over the years. But our family traditions - those I do remember vividly. It may not feel great having to cut back but the truth is very few will even remember what you gave them but the positive impact it can have your debt journey will be significant. Being debt-free is a worth a little shot-term and eventually forgotten pain.
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  11. I really agree with your philosophy here. We’re currently still doing the whole gift exchange ordeal, but I often think about just opting out. There are so many people to buy for and it’s just a mess. It takes away from what is important and just encourages many of these people to be even greater consumers. We try to buy everything on sale and keep in minimal. It still hurts.
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  12. This was a really stressful argument I had with my husband recently as I told him this is why I don’t like going to his parents for Christmas. It’s too much family together that you have to buy gifts for and I just don’t like it. I realize you spend so much more if you do gift cards than if I can find something on sale online or at a store so I try to cut out gift card gifts unless I get them for free through one of my rewards cards, like with Discover or something.

    I agree with the photo sentiment… most parents/grandparents would rather have a great family photo in a frame (can buy one second hand or repurpose one you own) than some body soap they won’t use! I’m also a fan of costume jewelry myself so if you have family like me who love lots of costume jewelry, you can find a store like Charming Charlie (if you’ve got one) where you can find great gifts on clearance that won’t break the bank.
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    • I think if my family really wanted something they couldn’t by for themselves, it might be different. All the adults have everything they need, and most of what they want, so it just doesn’t make sense for us all to buy something for each other. I’d rather just do a meal and watch movies or something.

  13. Hey Kim! Slashing your gift list is a great tip and pretty well accepted these days. Our family gets together and gives gifts only to the children. All other gifting is usually done before we all gather. It takes a lot of stress and pressure from family memebers who aren’t as fortunate as others.

    For friends and coworkers, nothing like coming over for some peppermint hot chocolate and talking about the holidays in a positive light with old christmas classics playing on the TV!

    All the best this coming season!
    Jessica recently posted..5 Ways How To Debt Proof Your ChristmasMy Profile

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