Planning a Debt-Free New Year: Recover from Holiday Spending

Nobody loves the holidays more than big corporations, because people are more pressured to spend money on gifts, flights, hotels, food, decorations, family outings, and more. This year, holiday spending is supposed to grow somewhere between 2.9% and 3.4%, or about $1.62 trillion. While this figure is astronomical, it actually represents stunted growth as compared to the same time last year. Last year, holiday sales grew 4.2% to a total of $1.57 trillion. This is still below average, with the 10-year average being 5.2% growth. But this probably doesn’t come as a surprise to anyone who has had to cut back due to the increasing cost of living. If you are struggling with finances, the holidays probably won’t improve your situation. Read on for tips to keep holiday spending in check. If your debt requires further assistance, contact Henderson Bankruptcy Attorneys for your free consultation today at 702-899-3328.

Set a Budget For Gifts & Stick To It

It isn’t hard to spend more than you intend when holiday shopping for those you love, especially if your love language is gift-giving. But most of your recipients won’t care how much you spent, because as the saying goes, it’s the thought that counts. Some may even feel uncomfortable receiving a lavish gift if they believe it is outside of the giver’s budget. There are a few approaches to setting budgets for holiday gifts. One is basing how much you spend on your annual income. Some experts recommend spending no more than 1% to 1.5% of your annual income on holiday gifts- so if you make $100,000 per year, plan on spending $1,000 or less on gift shopping. This falls in line with the estimated $1,0007 expected to be spent on holiday gift shopping total per person this year. But if you have less disposable income available due to increasing expenses, your loved ones will understand (or don’t even have to know) if you keep gifts on the lower-end of your budget. Consider homemade and experience gifts, as they are more meaningful to many people anyway.

Withdraw Cash & Only Spend That

Swiping a card doesn’t give the same money-losing sensation that spending cash does. If you are concerned about going overboard on holiday spending this year, consider sitting down and working out your holiday budget, then withdrawing that amount of cash from your bank account. Only spend from this fund whenever you are making a holiday-related purchase. If you use this method, it is important that you are accurate with your estimations for groceries, gas, gifts, and any other expenditures you may have during the holidays. Otherwise, you will be forced to break the seal and spend with your cards, making it easier to stray from your budget plan more times throughout the holiday season.

Consider a Gift Exchange

The average American plans to spend about $1,000 on holiday gifts this year, which even with the current cost of living, buys quite a luxurious gift. That $1,000 likely represents gifts for multiple recipients on the shopper’s list. Therefore, one simple way to cut down on holiday expenses is to reduce the amount of people on your holiday shopping list. This doesn’t have to be in a rude or exclusionary way- setting up a gift exchange puts a fun twist on gift-giving so that it doesn’t feel like a bad thing. Imagine how much less stressed you will be if you only have one gift to buy, with a reasonable price limit assigned. There are a few different popular gift exchange party themes used during the holiday season. In Secret Santa, recipients draw each other’s names at random and don’t include who the gift is from on its tag. The recipient has to guess who their Secret Santa was based on the gift. In White Elephant, each participant brings and opens a gift, but is given the chance to steal a previously opened gift instead of opening a new one. Some also play this game with gag gifts. You could also pick a reasonably priced item as a theme for the exchange, such as all jigsaw puzzles or holiday mugs. Regardless of the game picked, setting up a gift exchange relieves stress and pressure by reducing how many of gifts that must be bought, especially if the host enacts a price limit.

Think About Next Year’s Expenses When Making This Holiday’s Purchases

Holiday shopping can be a great distraction from the stressors of the upcoming year, like rising health insurance premiums and mortgage interest rates holding steady. As much as we want to push those concerns aside, money spent during the holidays could be put aside for financial strain in times ahead. If you have a new, high-paying job lined up or are executing the sale of a high-value asset, you have every right to go all out for the holidays. But if you are living paycheck to paycheck and barely making minimum payments on your debts, splurging on the holidays now could put you in an even worse position next year. An estimated 1 in 4 Americans still had not paid off 2024 holiday credit card debt as of November 2025. Becoming one of that 25% can be shockingly easy, despite plans to be more financially wise in the new year. Having restraint now can save you from potential financial strain in 2026.

Cash In On Credit Card Points

Spending on credit cards can be risky, but it also comes with benefits like points which can be redeemed for cash back, flights, and more. This may be the best time to cash in on any points you have accrued over the year, especially if you think there is a possibility you declare bankruptcy in the near future. When a debtor files for bankruptcy, they lose all of their credit cards, along with all of the points they have accumulated with them. This is also a reason to avoid redeeming your points for cash back on your credit card balance. This could be a good time to stock up on home essentials and nonperishable groceries, as trustees typically view these as reasonable pre-bankruptcy purchases and they are protected by bankruptcy exemptions. However, if you are dealing with a bankruptcy situation, consulting Henderson Bankruptcy Lawyers could offer invaluable guidance. But only you know the most efficient way to cash in the points on your credit cards, which vary from company to company.

Do You Have Debt From Year Round You Can No Longer Manage? Start Learning More About Bankruptcy Today

Debt lingers, accrues interest, and can escalate to a lawsuit from your creditor or even a wage garnishment or bank account levy. Without careful budgeting, the holidays, and all of the extra expenses surrounding them, can exacerbate debt. If you find yourself in overwhelming debt despite your best efforts, you may need bankruptcy in the new year, or even sooner. Bankruptcy can clear unsecured debts with few limitations, but things become more complicated if you also have secured and priority debts. Deciding when to file your petition can also be a sensitive issue. Our team can help you navigate these factors and more if you are considering filing for bankruptcy in Henderson. Discuss your situation today and see if you qualify for Zero Down financing for your case. Schedule your free phone consultation with Henderson Bankruptcy Attorneys today by calling 702-899-3328.