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5 ways to handle the holidays when you're in debt

The holidays can be hard on your wallet, even if you’re in a strong financial position. But they can be especially challenging for people in debt — and if that’s you, you’re not alone.

Outstanding credit card debt balances, which are known for coming with particularly high interest rates, jumped to $1.23 trillion in the third quarter of this year, according to from the Federal Reserve Bank of New York. Understandably, financial stress from being in debt can compound during the holidays when there are gifts, decorations and flights to buy: 69% of respondents to a of 2,000 Americans published by Talker Research and , a consumer fintech banking platform, said the holiday season is the most financially stressful part of the year.

But financial experts say there are several changes you can make to your plans this season to handle the holidays when you’re in debt.

How to handle the holidays when you’re in debt

From adjusting your gifting strategy to finding free events, here are five ways to alleviate the stress of spending in December when you’re in debt.

1. Review your debt repayment strategy
The first step to ready yourself for holiday spending is to revisit your , says Chloé Moore, a certified financial planner and founder of Financial Staples in Atlanta. By doing this, you can have a clear understanding of how much wiggle room you have for your spending.

If you typically pay $250 towards a debt payment per month, subtract that, your housing costs, the typical amount you pay for everyday essentials like gas and groceries, and any other necessary payments from your total income for December. The figure you have leftover can be used to determine how much you can spend for the rest of the month.

Having a set amount of money that you can spend in mind also “gives you the freedom to say ‘no’ or ‘I can’t afford this’” when friends and family invite you to activities that will eat away at your budget, Moore says. That brings us to the next step.

2. Be honest
When loved ones invite you to participate in costly activities like shopping at a holiday market or seeing a show, it can be difficult to say no. But being honest with your friends and family, and letting them know you are prioritizing debt repayment can help, says Spencer Betts, a certified financial planner and financial consultant with Bickling Financial Services in Lexington, Massachusetts. Setting expectations up-front helps avoid disappointment.

“Talk openly about your goals with family and friends. Much of the stress comes from hiding financial struggles,” Betts says. “Sharing your situation can reduce shame and help others support your efforts. Many people have faced similar challenges, and openness often leads to encouragement.”

3. Reconsider your gifting plan
Persistent inflation and tariffs mean many items are coming with price tags that are higher than normal, and that makes gifting on a budget more challenging. Consider gift options that reduce or eliminate gift giving, such as organizing an exchange in which your family members each draw one name from a hat of who they’ll buy a gift for, Moore says. White elephant exchanges, where everyone brings a wrapped gift that can be opened or “stolen” by participants who get to open gifts in the order of a number they draw, are another fun option.

Consider whether anyone on your gift list would appreciate a shared experience like an outing,

homemade treats or even handwritten cards that express appreciation, says Scott Ward, a certified financial planner and the senior vice president and wealth advisor for Compound Planning in Birmingham, Alabama. “Thoughtful gestures of this nature can reduce price-pressure stress and prevent overspending, too.”

You can also opt to forgo gift giving completely, which may be a good option if several members of your family are in debt and financially stressed about the holidays.

4. Take advantage of deals
If you do choose to buy gifts, don’t forget to look out for the ample sales that retailers hold around the holidays. Even if you missed Black Friday and Cyber Monday, there’s a good chance that the stores you typically shop at are offering discounts throughout the rest of the year.

You can find deep discounts on items like headphones, televisions and coffee makers in December, according to . Websites like CamelCamelCamel can help you with price tracking, and even alert you when an item you’ve been eyeing goes on sale. And making purchases via cards that offer cash back is a good way to save even while spending. In addition, using a secured charge card can also help you build your credit as you spend. You’ll want to look for one with low or no deposit requirements and reports to the three major credit bureaus (Equifax, Experian and TransUnion).

5. Plan free and low-cost activities
Free and low-cost activities like going out for a hot chocolate or driving around to see holiday lights can replace expensive activities or gift giving, and still allow everyone to spend time together. Consider inviting your loved ones over to watch a football game, or host a potluck, game night or movie night, Moore says.

And take advantage of free holiday activities offered by towns, churches and community groups, Betts suggests. “These events allow you to celebrate without sacrificing your financial goals.” 

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