It’s Christmas time!

This post is part of a mid year review and tune up series. The next topic in this series will be taxes, yes, time to think about taxes again!

No I have not gone mad or lost track of time! I know its still June! But it really is about time to start thinking about Christmas.  The ideal time would have been the week after Christmas last year, but we can’t go back in time,, so lets make use of what we have and have a stress free and debt free holiday season! What can you do now? 12 tips for a debt-free and stress-free Christmas!

1. Make a list and check it twice : Make a list of anyone and everyone you gave a gift to last year and plan to give this year. Don’t forget to include maids or hair dressers or anyone who you will usually give gifts to. Then go over it again and think about that person. How you feel about them? Do you really want to give a gift to them? If you do, keep the name or else remove it and make a meaningful list.

2. Make a budget : You can’t buy something that you can’t afford. So be realistic and come up with an approximate amount that you can afford now or afford to save before Christmas.

3. Build a gift list : For each person in your list, jot down an idea on what they might like or what would be a good gift for them. While you are at it, think of a possible amount you are willing to spend for each person. Christmas is not about gifts. It is about family, faith and love. Consider, if for example, it would be more appropriate to give something else; like your time, instead of a gift. For example, the best gift to your parents might be your commitment to spend an entire week/weekend with them. That will make them more happy than your fancy gift wrapped tie! Consider home made gifts too. A lot of people will appreciate a personalized gift like a painting of you and them or a craft item. If you pick a good idea now, you have 6 months to work on it and make it fabulous! Now you have a lot of time, so think about it.

4. Reconcile your budget and gift list : Check your budget and your gift list; eliminate very expensive items and consider alternative ideas. For most adults, meaningful gifts beat the expensive gifts hands down.

5. Check last years decoration bins : How many times have you forgot where a particular item is and bought the same item again because there was no time to search for it? Well, now there is a lot of time. Check your decorations and make a list of what all you need, so you can buy them over the next 6 months or save money to buy them in December.

6. And those party expenses : You might not know how many parties you might be hosting but come up with a party expense budget, so at least you won’t agree to host more than you can handle.

7. Do you plan to travel during the holidays? : Think about where and how much you can afford. Go to Kayak or Bing travel and create an alert to send deals for your selected route.

8. Create a savings plan : Now add up the budget for gifts, entertainment, decorations and travel. Divide that $x by the number of paychecks left till Christmas and put that amount away for this specific purpose as soon as you get that paycheck (for example if you need $2500 for all of these and you are paid twice a month, you have 12 more pay checks.  So from every paycheck save ~$209 for this purpose).

Note: Some banks or credit unions offer a special Christmas club savings account. They often have restrictions like only one free withdrawal or minimum deposit amounts. Check the rules and see if they are worth it (higher interest or bonus). Otherwise just use a targeted spending account in Ally or SmartyPig. An added advantage of SmartyPig is that you might be able to get a sizeable bonus if you redeem your savings for a giftcard when the goal is achieved. For example, if there are lots of book lovers on your list, you might be able to redeem the money saved in SmartyPig for a Barnes & Nobles gift card that gives a 5% bonus or an Amazon gift card with a 4% bonus.

9. Start collecting frequent flyer miles for your travel : If you know you are going to travel, find the most probable airline that gives the cheapest rate (for example, if you are traveling to/from Atlanta, Delta might be a good one to target). Then start collecting frequent flyer points for that airline so that you could use them to subsidize at least part of your travel plan. Sign up for an airline credit card (only if you are responsible with credit cards), with an eye on the best sign on bonus deals. A lot of times, the initial bonus itself might cover one round trip flight ticket within the US. Use the card till you buy the ticket and collect as many frequent flyer miles as you can. Use sites like e-Miles to do surveys during your free time and accumulate more miles.

10. Think about redeeming your credit card points for gift cards : If your gift list is gift-card-heavy, choose a good card that gives you a lot of points for something you spend on anyway (grocery, gas). Use that card regularly and redeem the points for the gift cards in your list as you touch the limit. Don’t redeem them for electronics, they have the worst points to dollar conversion. Taking about gift cards, if you already have some gift cards and not used yet, start using it now. Think about how to use it for (11).

11. Space your purchase : If you are absolutely sure what you want to buy for someone, keep a look out for the gift and grab it if it goes on sale. You could also buy one gift every month from your gift list. This way, come December, you won’t have a huge bill.

Note: There are some problems with buying your gift way ahead as well. For example, buying gifts for children way ahead of time is not a good idea. Their interests change very frequently. Electronic gadgets might go out of style or have a newer version by that time. Also pay attention to the store return policy. If it is an item that you are not sure the recipient will like, if you buy that too early, the return window will be long gone and they will be stuck with a gift they don’t like.

Stocking stuffers and Secret Santa gifts are ideal things to buy early. So are antiques or some other things that you are absolutely sure of and have no need to think about returning.

12. Start thinking about holiday hiring : Finally, it is very early to actually apply for seasonal jobs, but it is never too early to start your networking. Networking might seem ridiculous for a holiday job, but with this economy, very few jobs are available and you have to do whatever it takes to stand out. Talk to your favorite store manager about their timeline and show interest. That will help you be first in line and give more choices too. Have all the information handy to apply for the job, if you are interested.

I feel weird when they start playing holiday music in stores even before Halloween. The stores are getting desperate for sales and doing everything to make consumers buy more. By simple planning we can avoid falling into the trap by buying just what we need when we need it. Christmas is not about shopping or opening new gifts, even though it has become a commercial holiday in recent years. Have a magical Christmas by spending time with your family and bonding with your friends while not burning a hole in your pocket buying gifts.

Tags: christmas, saving, shopping