If you’re like most Americans, the celebration and sparkle of the holiday season will get the best of you. That’s right, chances are you’ll end up spending too much and out come those credit cards! You feel so good about the gifts you bought for everyone. But in January when your statements arrive, so does the sobering reality check. You might have been doing really well with your budget up until then. But alas, all those months of diligent effort paying off your credit card debt just took three steps backwards.

“Next year,” you tell yourself, “I’ll do better.” Or at least, that is what you said last year. Fast forward and here we are, Black Friday is just around the corner, and you still don’t have a plan. If this describes you, don’t feel alone. During the 2016 holiday season, U.S. consumers broke debt records, amassing a collective $34.4 billion in credit card debt.[1]

Spending Less

Spending less than last year is certainly a worthy goal, but it doesn’t have to be a, “we had to cut back this year” disclaimer announcement to lower expectations. A few years back my wife’s family started a “Yankee swap.” (And yes, thankfully I’ve lived in New England long enough to consider myself a bonafide Yankee.) With the Yankee swap the rules are simple, everyone over 18 participates and buys one gift that costs no more than $20. Instead of buying gifts for 10 people, which would run well over $100, my wife and I only need to budget $40 – nice savings!

Next, the swap begins with everyone drawing a number to see who picks the first gift. You might like what you pick or you might not…but the trick is, everyone but the first gift opener can swap what they get with someone else who already opened. This makes for group fun and many laughs, and it’s become a nice tradition for our holidays. Best of all, everyone feels great about saving money and being together.

Another popular approach is sale shopping, especially on Black Friday and Cyber Monday. Massive discounts can be found but without some good discipline and a budget to stick to, it’s still easy to over spend. In fact without a plan, you probably will blow your budget, especially if your significant other is casing the deals at a different location!

Having a budget and funding a budget are two different things

Creating a budget sounds easy, but keeping to a budget is another story. Statistics say 60% percent of us will not to stick to our budget.[2] There are many ways to get off track, but probably the most over looked cause is not properly funding your budget.

What, “fund my budget?” What does that mean you might ask. Funding your budget means to take the money you have now and decide how you will spend it until you get your next paycheck. There are whole systems of budgeting around this premise, they are often called zero-based, zero-dollar or envelope budgeting. Regardless of the name, the premise is the same. You make a plan of how you will spend the money you have right now. If you only spend the money you have right now, you will never go further into debt.

Start saving, now

Remember the $1,000 you want to spend on gifts for the family this year. Here is a little secret, it will be much easier to start saving for that now (it’s October as I write this) rather than waiting until December. If you set up an envelope budget to do this, you see the money you have in your bank account now, but it is ear-marked for gifts. You know exactly how much you’ll have to spend, and the more you stuff into that envelope before gift buying season, the closer you’ll get to your goal.

Envelope Budgeting in Banktivity

When using envelope budgeting in Banktivity you know where every dollar is going, always. But what about all those unexpected expenses that always seem to crop up at the most inopportune time? With the envelope budgeting feature of Banktivity, you have the flexibility to move unused budgeted funds from one virtual expense envelope to another in the event of an emergency.

Now you could go old school, and keep physical cash in physical envelopes, but we don’t recommend it. It’s time consuming, and not as safe as keeping your money in a bank. Banktivity envelope budgeting gives you the same flexibility as physical envelopes but better visibility at all times! Remember your significant other shopping on Black Friday at Kohl’s while you scope out Target? With Banktivity you can both know immediately how much has been spent* as it happens!

The takeaways here on how to stay off the debt sheet: Find ways to spend less where you can, and above all, keep track of your income and expenses with an envelope budget plan with every dollar coming in, being assigned to an envelope. If your expenses are inline, you can probably budget an emergency spending envelope too!

Happy holidays from all of us at IGG Software, and please be sure to let us know if these holiday spending tips helped you. You can find us on Twitter, Facebook and reddit, or right here in the comments.

Resources for you:

Holding yourself accountable with envelope budgeting
Free Webinars to help you get started

[1] http://www.bankrate.com/finance/credit-cards/experts-on-holiday-credit-card-spending.aspx

[2] https://money.usnews.com/money/personal-finance/articles/2015/09/11/5-big-reasons-budgets-fail

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4 comments on “Staying Debt Free During the Holiday Spending Frenzy

  • I make a list of people to whom I will send or give gifts and add notes for their likes and dislikes. Shopping year around lets me accumulate the gifts without blowing the budget in a last minute shopping spree.

  • You make the statement about “With Banktivity you can both know immediately how much has been spent* at it happens!” with an asterisk on “spent*”. As I can’t find any foot notes on this page associated with this asterisk, I assume this asterisk has something to do with the lack of support of Envelope budget tracking on the iPhone Banktivity app. When will the iPhone App have support for the excellent envelope budgeting that is in your Mac App? I want to be able to see real-time views of how much money I have in my envelopes so I can more easily make informed choices while I am away from my computer!

    • Hi Allan, thanks for your comment! The asterisk! The intention was to point out that the mobile syncing requires the Banktivity for iPhone app. Good news, we do have an upgrade in the works for Banktivity for iPhone (and also the iPad version). It’s too early to say for certain what new features will make it in. Please keep in touch, towards the end of the month we hope to have more information!

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