Handling the Financial Holiday Headache

It happened again. We said it wouldn’t, but it did. Last January, we struggled to dig out from credit card debt that we accumulated from holiday spending. And we said that next year, it would be different. We meant that at the time, but then the cycle repeated.

If this is where you find yourself this year after the holidays, you’re not alone. The internet is full of articles on how to avoid and recover from holiday overspending (just do a search on Christmas overspending!).

Overspending on the Holidays

The holidays encourage overspending from emotion. Watch the new car commercials – how much information about the car do you learn? Instead, the commercials portray emotions – because marketers know that emotions sell.

At the other end of the emotional spectrum, we spend to medicate loneliness or grief if the holidays are difficult for us. If you’ve lost a close friend or family member recently (or maybe a while ago), you know this feeling. Whether we’re trying to recreate experiences we treasure or create new experiences to replace them, we spend.

Or maybe we spend to meet expectations of family, friends, or co-workers. Travel, food, gifts – different families have different traditions, but most of them involve spending money. And over time, our spending tends to increase (through inflation, increasing expectations, and expanding families – among other things).

The Morning After

But then comes the hangover. In January, the credit card bills start rolling in and we realize that we’ve done it again – spent more than we could afford. We tighten our belts in other areas to try to pay off the credit cards. Or maybe we just swallow the increased interest payments and repay our spending over time. Either way, our finances are impacted in the first quarter, and maybe well beyond.

We want next year to be different – but, of course, we wanted the same thing last year. What do we do now to recover from our holiday splurge? And how can we retain the joy of the holiday season next year without piling on debt?

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Get Out of Jail

(but maybe not free)

If you’ve overspent on the holidays, and especially if that involved adding to credit card debt, it’s important to recognize that and address it quickly. Otherwise, higher credit card interest payments will have a lasting negative impact on your finances. Similarly, if you dipped into emergency savings for holiday spending, you’ll want to replace those funds as soon as possible in order to safeguard against unexpected expenses.

Step 1: Track Your Spending

Yes, we’ve said it before…you can’t change what you’re not tracking. If next year is going to be different than this year, it will start with understanding what went wrong this year. What did you spend, and where?

Best case, you have receipts and know exactly what you spent and what you spent it on. If you don’t have good records, you can still approximate your spending in a couple of steps:

1. Determine your total holiday spending by reviewing credit card statements (and any other applicable records, like bank statements). Some credit cards will even help categorize transactions.
2. List things you spent money on and estimate the amount spent in each area. Consider:
   1. Who did you buy gifts for and how much did you spend?
   2. What did you spend on holiday food and entertainment?
   3. What events did you attend and how much did they cost?
   4. Did you travel? If so, what was the expense associated with that?
   5. Did you purchase holiday decorations or clothes? If so, what did you spend?

The more detailed you can be regarding your spending, the better you can control it next year. For example, let’s say you spent $1500 on the holidays this year and of that, $500 ended up on credit cards. You might try to cut the holiday spending plan to $1000 in the coming year, but if you don’t know where the $1500 went, it may be difficult to adjust next year’s plan. Making this list sooner rather than later helps to keep it more accurate.

Step 2: Make and Execute a Plan

If your credit card payments increased as a result of holiday spending, you’ll need to make some adjustments in your Spending Plan in order to make room for those payments. Look over your January plan and see:

• Can some expenses be postponed (eg, clothes, household items, etc.)?
• Are there other expenses that can be eliminated for a month or two (such as, entertainment-related costs like dining out or movies)?
• Can some expenses be reduced (for example, food, gas, or others)?
• Check out our article on Spending Tradeoffs for more ideas.

Consider income opportunities:

• Will you be getting a year-end bonus that could be used to pay off the purchases?
• Could a tax refund be used to reduce the credit card balances?

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Mind Your Mindset

After climbing out of any financial hole we may have created with holiday spending this year, it’s time to plan for better stewardship in the next holiday season. Often unspoken assumptions dictate how we view and plan for the holidays. Changing our thinking is the first step toward a more intentional holiday season.

Give Grace

Sometimes, giving ourselves grace is the place to start. The accuser would have us wallow in guilt, discouraging us and keeping us from making needed changes.

Money is important. But it’s not salvation. God’s love for us does not diminish because we make mistakes financially (whether during the holidays or any other time). And our mistakes don’t negate his plans for us. God extends grace to cover our mistakes, and we need to do the same for ourselves.

But giving grace doesn’t mean giving up. Maybe this year marks another in a long string of years in which holiday spending has endangered your finances and moved you away from financial freedom. Avoid thinking along the lines of “I always make this mistake…”. You may have made the same mistake several times in the past, but the past doesn’t determine the future. God gives us opportunities and strength to make changes.

Accept Accountability

At the same time, we must still take responsibility for our decisions and actions. We need to watch out for three limiting beliefs that can keep us stuck in a repeating cycle of actions and consequences.

1. Recognize Responsibility

It’s easy to shift responsibility to others for our decisions and actions. We simply responded to an invitation or fulfilled an expectation. We wanted to make others happy. Our concern for their feelings led us to an unplanned expense.

Concern for others is a positive trait, and the holidays are a great time to show love for others. But we must take responsibility for the choices we make in that process, including the financial choices related to spending on events, gifts, etc.

2. Acknowledge Agency

Closely related to blaming others is assuming that we’re powerless to make a change. Whether we feel our hand was forced by circumstances or by the expectations of others, if we assume that we have no power to change, we won’t even try. Such an assumption becomes self-fulfilling.

In fact, we almost always have choices. We have the ability to decide and act differently. When we realize this, we position ourselves to experience the holidays more intentionally and proactively, rather than just letting them happen to us. We can choose whose expectations we will meet and whose we won’t. (And that includes our own expectations!)

3. Recognize Resources

When our finances run short, we can tend to blame the shortfall on lack of resources. But this is tantamount to declaring that God has not provided sufficiently for us, and we know from Scripture that God provides all of our needs. If there’s a shortfall, it’s not because God hasn’t provided – it’s because we’ve misappropriated what he has provided. We need to replace scarcity thinking (“I don’t have enough resources”) with an abundance mindset (“God has provided all I need”).

If God has provided all we need, then he’s not asking us to spend resources he hasn’t provided. If there are more demands than there are resources to meet them, then God isn’t calling us to meet all those demands. This may feel stressful at first, but it’s actually freeing. If we understand that God is not asking us to do more than he has provided for, then this frees us to say No to some things. Much of the reason behind our holiday financial stress is that we don’t feel empowered to say No.

At the end of the day, resources are sufficient but limited. We can say Yes to some things, but not to everything. This is true regardless of whether we feel empowered to decline some invitations or not. It’s often been said that we can spend a dollar any way we want, but we can only spend it once. We need to take responsibility for our role in managing the Master’s resources. The God who provided these resources also empowers us to use them wisely, if we seek his guidance.

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Plan for Success

A definition of insanity commonly attributed to Albert Einstein is “Doing the same thing over and over and expecting different results.” The quote may not be Einstein’s, but it’s still true. If we want next year to be different, we’re going to have to do different things. And that begins with planning. The time is now, with this year’s holiday spending fresh on our minds.

We mentioned before that the place to start is with tracking spending from this year’s holiday season. The more detailed you can be, the better. We recommend tracking spending beginning with the Thanksgiving holiday through the New Year (that is, spending that’s specific to the holidays).

Once we understand what we spent this year, we’re in a position to ask some key questions.

What’s Important?

The first question is, what’s important during the holidays? Here are some questions to ask to help determine the priorities:

• What are the non-negotiables? List the events, gatherings, or other traditions that are so meaningful to you and your family that they must happen even if other things can’t. Estimate the cost of these non-negotiables based on this year’s expenditures.
• What else is important? Short of the non-negotiables, what else is important? For example, if gift-giving is a primary love language for your family, you may want to prioritize the gift exchange. Estimate your total spending on gifts this year and project that for next year.
• Can some expenses be eliminated? Are there traditions that no longer serve your family well? Is there a way to replace more costly traditions with less expensive ones?

How Much Can We Afford?

We mentioned above that it’s important to recognize that we have sufficient – but limited – resources to achieve what we need to accomplish. Regardless of the importance of events, experiences, and gifts, it’s likely that we can’t afford everything we want to do or buy. So we need to make some trade-offs.

The starting point is to set an overall spending limit. If you were to spend the same amount next year that you spent this year, could you do that without using credit cards or dipping into emergency savings? Answering this question requires understanding your income and expenses beyond just holiday spending, of course – but once you have a target number, you at least know what you need to do in order to have that number available for holiday spending.

How Will We Afford it?

Once you know how much you need to save for the holidays, the next step is to plan for how to save. Can you incorporate that saving into your monthly Spending Plan? Do you need to earmark windfall income (such as a tax refund or bonus) for holiday spending?

However you plan to save, ensure that the numbers actually work. If you’ve decided, for example, that you need $1,800 for holiday spending, then make sure that you can actually allocate $150/month in your spending plan – and put it somewhere other than your main bank account so that you don’t spend it unintentionally. If you can’t find $150 worth of trade-offs in your spending plan, then how much can you allocate from windfall income? Do you need to cut back on a summer vacation in order to have money for holiday spending?

If you can’t envision a plan that actually gets you to the number you want to spend on the holidays, then determine how much you actually can save (and put a plan in place to do that!) and revisit your holiday spending priorities. What will you need to eliminate or dial back on?

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Redefine the Season

Often, much of the reason for holiday overspending is that we’ve allowed our culture (whether the culture in general or our extended family’s lifestyle) to define the season for us. We feel like we don’t have a choice but to spend, spend, spend. We spoke earlier about the fact that we actually do have choices and we’re accountable from a stewardship perspective for how we make those choices.

Sometimes, we choose to meet the expectations of others because those expectations are really important to them – even if they don’t mean that much to us. Maybe that expensive annual holiday event is so meaningful to extended family members that it qualifies as a non-negotiable. That’s OK – it’s fair to include items like that in our priority list. But it’s still true that we can spend a dollar only once, so we need to intentionally decide what trade-offs are needed.

Lots of dynamics feed into holiday planning and spending. With that in mind, here are a few suggestions (not rules!) to think about when planning for next year’s holidays. If you find yourself in a place of trying to recover financially from the holidays, consider whether any of these ideas might help.

Remember the Reason

“Jesus is the Reason for the Season!” Remember that slogan (which, ironically, became a major marketing campaign)? The slogan may have been overused to the point of triteness, but it’s still true. What we actually celebrate in this season is Jesus’ birth. The marketing, the shopping, much of the music, even most of the family events – these typically deflect our attention from the birth of the Savior.

“Martha, Martha,” the Lord answered, “you are worried and upset about many things, but few things are needed—or indeed only one.”

Luke 10:41-42

Martha was distracted by all the work to be done to host Jesus. Are we similarly distracted by all the work to be done to “make the holidays special” for ourselves and others? Would Jesus say similar words to us as he watched us scurry about in this season?

The Christmas season is already special – but not because of all the work we put into it. It’s special because of the birth we celebrate. There’s much to enjoy about this season, but only one thing is needed – and that’s Jesus. And we don’t need to invite him into the season – he’s already here! Our job is to rejoice in his presence.

Does this help manage the distractions? Hebrews 12:1 enjoins us to “throw off everything that hinders” as we run the race of the Christian life, and that certainly applies to this season. Are there things that are “hindering” your celebration of Christ that may need to be thrown off? Think of it this way: if there are non-believers in your family, do they see Jesus in your celebrations and holiday priorities?

Cultivate Contentment

Contentment is one of the key attitudes of a faithful steward. And lack of contentment is behind much of our holiday spending, especially in the area of gift-giving. The giving of gifts is one way to express love, and there’s nothing intrinsically wrong with giving and receiving gifts. In fact, one of the important parts of the Christmas story is the magi giving gifts to Jesus!

Marketers have taken advantage of this to encourage spending beyond our means. You’ll never see a commercial with a Christmas tree with just a couple presents underneath it. No – the assumption is that everyone must have multiple gifts, regardless of what they might need (or even want!). So you’ll see trees surrounded by piles of brightly wrapped packages, creating the expectation that that’s what your tree needs to look like.

Studies have shown that children who receive many gifts on Christmas are often less grateful and less joyful than those who receive meaningful, but fewer, gifts. (If you’re a Harry Potter fan, think Dudley on his birthday in the first movie. It’s not always quite that blatant, but the caricature does point to the contrast between materialism and contentment.) Could the preponderance of gifts actually be one of those hindrances we need to “throw off”?

Emphasize Experiences

Many of the gifts we purchase (especially for children) will be either broken or forgotten within a short time. But the experiences we share with our families create memories that last a lifetime. And the great thing is that many experiences – like performances of “The Messiah”, candlelight services at church, a “walk through Bethlehem” event – reinforce the message of the season in a way that most purchased gifts would not.

“But when you give a banquet, invite the poor, the crippled, the lame, the blind, and you will be blessed. Although they cannot repay you, you will be repaid at the resurrection of the righteous.”

Luke 14:13-14

As part of this, the holiday season provides extra opportunities to serve – and many of these events are family-friendly. Whether it’s serving in a soup kitchen, delivering gifts to children in need, taking part in church activities focused on the poor, or any number of other serving opportunities, these experiences are great ways disciple our kids in loving God and loving others. Celebrating with family is natural during the holidays – but celebrating with the needy can be eternal. (And don’t forget how Jesus differentiates the sheep from the goats, Matthew 25:31-46!)

Maybe Next Year…

Maybe next year will be different. Perhaps next holiday season, you’ll manage your spending to avoid debt. Maybe you’ll be able to focus on the “one thing” that’s really important.  

Maybe. But probably not. Next year will see the same pressures and the same marketing as this year. There will be the same family expectations, the same never-ending list of obligations, commitments, and things to do and to buy. Next year won’t be any different.

Unless. Unless we prayerfully think through what the holiday season looked like this year. Unless we plan to prioritize what’s truly meaningful over traditions and patterns that obscure the real purpose behind Christmas.

Next year can be different – but it will require doing things differently than we did them this year. What are the things we want to retain? What are the things we need to de-emphasize? And what does all of that mean for our stewardship in this season?

May God guide our prayers, our priorities, and our planning!

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