5 Ways To Avoid Taking on Debt for the Holidays

The holidays are a time to spread cheer, but they can quickly turn sour if you find your bank account in the red. Spending above your means can have an effect on your budget in the new year.

A Gallup poll of Americans' holiday spending in 2025 found that consumers plan to spend an average of $1,007 on gifts. It's close to what shoppers said they would spend on presents in 2024 ($1,014) and more than what people said they would spend in 2023 ($923).

As Black Friday kicks off the start of the holiday shopping season, it's the perfect time to get your finances in order with a few simple tips to help you avoid starting 2026 in the red.

Consumer financial expert Austin Kilgore points out that heading into January burdened with debt is not the way most people want to start the new year. He says if you're carrying credit card debt, paying less than the full balance every month, you end up paying more (often a lot more) than the purchase price of what you bought.

"For example, if you carried $3,000 in credit card debt, at a 22% interest rate, and made standard monthly minimum payments of interest plus 3% of the balance, it would take you 17 years to pay it off—and cost more than $4,200 in interest alone," Kilgore tells Realtor.com®.

So, as you make your shopping list, he offers the following tips.

1. Plan ahead

A budget is the best way to make sure you don't overspend. List all the people (including yourself) that you need to buy for and stick to how much you want to spend.

"Use an app, pencil and paper, or spreadsheet, and write down every expense you plan on: giftees and their gifts/budgeted amount, decor, holiday meals, cards and mailing, tips to service providers, child care, and any travel expenses," Kilgore suggests.

2. Track your spending

As you start checking people off your list, make sure you're keeping your budget in line by tracking your spending.

"Trying to match, or one-up, what your sister or mother-in-law gave you last year easily ends up in overspending," Kilgore points out. "Go back to the kind of holiday you want to create, remain confident in your priorities, and give reasonably with a generous smile."

3. Avoid credit cards

This is an obvious one, but worth the reminder. It may seem easy to take out the plastic, but spending more money than what's on hand will only mean having to pay it back. You don't want to start the new year "owing" money. Spend what you can.

"If you use a credit card for purchases, track purchases on your phone’s calculator as you shop," advises Kilgore. "Check online balances regularly. If necessary, use a debit card or cash instead, so that balances cannot accumulate. The ultimate goal is to charge absolutely no more than you can pay off in full when the bill arrives."

4. Shop around

Since you're already shopping, make sure you "shop around" for those deals. See what's on sale, and compare prices.

"Plan shopping, online and off," says Kilgore. "Map out a plan for stores/sites you will visit, and what to shop for at each. Stay focused and avoid the temptation to 'just buy something small' for yourself."

5. Don't procrastinate

Sometimes the most expensive gifts will happen if you don't follow the tips above. Waiting until the last minute can put you in a position to spend more than you planned for that special person.

"Think ahead about recipients—who’d be ideal recipients for group gifts (coaches, teachers, family members). Set a budget and designate one person who can take time to find the right gift," suggests Kilgore.