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Christmas Budget - Plan for a debt free Christmas

Want to be debt free this Christmas? Then I have two words for you -- Christmas Budget! It is possible to have a great Christmas without racking up a mountain of debt.

For most of us the holiday season is a magical time of year, full of warmth and good cheer. Everyone's a little jollier at Christmas time. For a good number of us this usually leads to alot of carefree spending on extravagant gifts and ultimately MORE DEBT.

It is possible to have the type of Christmas you and your family have come to expect without the customary post christmas debt. Plan ahead and set up your christmas budget and you will escape the holiday season DEBT FREE.

Setting up a Christmas Buget

1Set Your Budget Amount - Some financial experts say your total Christmas budget should never exceed 5% of your annual income. Most people wouldn't spend anywhere near that on Christmas but the point here is to establish your own spending limit. At this point it doesn't have to be concrete, start with a fixed amount and write it down (this can be adjusted later as you work through the remaining steps).

2Make Your List - Make a comprehensive list of all the people you will be buying for such as family, friends and co-workers. When you've completed your list, go through it and determine how much you want to spend on each person. Keep in mind this will likely make up the lion's share of your christmas budget so you may have to adjust your initial budget amount accordingly.

Here's an excellent free tool that will make your christmas budgeting a whole lot easier: Holiday Spending Plan Worksheet

3Christmas Expenses - Figure out what your christmas expenditures are. For example, gifts, decorations, food and supplies for entertaining, charitable donations and so on. Split up your budget by alloting enough money to cover each expense. For example, if you have a $2000 budget and you expect about 90% of that to go to gifts, your total for gifts would be $1800.

4Plan Ahead - Planning ahead is critical in order for your christmas budget to be successful. Personally, I like to start planning my christmas budget 3 - 6 months before Christmas. Why? Several reasons, here are just a few of them:

Time to find that perfect gift for everyone on your list
Time to wait for it to go on sale and do price comparisons
Time to save up money and pay cash - credit is okay too as long as it's not used as extra money
You know how exactly how much you need to put away on each pay
No high interest fees
No frantic last minute shopping on Christmas eve
It's nice to have a little extra in the budget for special family outings

Gift and Money Saving Ideas for Christmas

Shop for gifts all year long
Keep track of people you've already bought for and cross them off your list
Pay cash as much as possible
Don't over do it - you don't have to keep up with the Jones'
Pitch in as a group for large gifts like a new TV for dad for example ;)
Crafty? give out crafted gifts such as quilts, knitted socks and scrap books etc.
Handy? donate you services. Fix a plumbing leak or help out with unfinished renovations
Give out cookies and other baked goods as gifts
Do you own something you no longer want or us that someone on your list might like?

How do you save money at Christmas?

Do you have a good money saving tip or great gift idea for Christmas?

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Your Tips and Gift Ideas

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One a month rule
I buy one big gift per month and spread the spending out over the whole year, that way it takes the stress out and people get more creative gifts. For ...