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A Christmas Budget for Debt-free Living

A Simple Christmas Budget for Debt-free Living

With Christmas looming, cashier lines around my little Mayberry are congested with desperate shoppers hoping to snag the latest IT item. Plastic cards are passed from shopper to cashier for quick transactions. Price tags are quickly forgotten as folks scramble to find the next item on their TO BUY list.

(This post contains affiliate links. Please see my disclosure policy for full details.)

Unfortunately for many, the joy and peace of December 25th morphs into anxiety and regret one month later when credit card bills start rolling in.

Very early on in our marriage, after a distressing credit card debacle, the truth of Proverbs 22:7b, "the borrower is a slave to the lender," became a catalyst for a financial revolution. Since those first few years of monetary missteps, The Hubs and I have determined to live debt-free. Apart from a mortgage, we have no debt.

Admittedly, it is not easy living on one income in a VERY two-income world, but with some determination, a big heap of self-control, and a little professional direction from Dave Ramsey, it IS POSSIBLE to live within our means...even at Christmas time.

Here's a quick run-down of how we do it each year. Brace yourselves, people, it's about to get a little candid around here.


Do you hear that? It's me opening up my checkbook to give you a little peek inside.

Every January, I determine a Christmas budget.

The Hubs and I spend one night in the first week of January redefining our annual budget. In terms of Christmas, we decide how much we would like to budget for presents (the kids, each other, our parents, extended family), a Christmas tree, Christmas dinner (I always host for our extended family.), and family activities/outings.

We divide that total by 12 to determine how much we have to put away each month in order to successfully save for our Christmas goals.

We control our money, not the other way around.

We have a separate checking account (apart from our regular bill-paying checking account) that we have affectionately dubbed The Short-Term Savings Account. (Yes, I know...it's a CHECKING account. But it is really used for SAVING purposes, hence the name.) Each month we dump the predetermined Christmas budget dollars, along with the money we are also saving for other special needs (e.g., birthdays, next car purchase, furniture replacement, clothing, etc.), into the account. I keep a running spreadsheet to determine how I have allocated or spent every dollar that is in the account.

I have the freedom to buy or save all year long.

I keep a running list in my Family Notebook of gift ideas for everyone in the family. By having a variety of gift options already written out, I can easily narrow my choices down to ones that would fit within my budget.

Because I squirrel away Christmas money all year long, I can choose to purchase Christmas gifts throughout the year as I find them on sale OR I can wait until the day before Christmas and purchase them all at once. Either way, I never have to buy anything on credit, because the money is already in the bank waiting to be spent.

When I buy a gift for someone, I deduct the purchase price from my spreadsheet and instantly see how much or little I have left to spend.

I buy creatively to stay within my Christmas budget.

Confession...for the past couple of years, we have budgeted $50 for Christmas presents for each one of our children for a total of $250 for children's gifts. As we are dedicated to maintaining both our budget and our Christmas gift-giving tradition, I have to be purposeful with every dollar I spend. Sometimes this means I have to be on the lookout all year for rock-bottom prices and coupons on desired gifts. Other times this means that I have to purchase gently used items knowing that my children don't care if the IT gift is shrink-wrapped or not. Often, including this year, our Frankincense item (gift to share) is a group gift that is opened by a few or all of the kids.

We ALWAYS stick to our $250 limit and have at times, including this year, returned items and revamped our gift plan if a gift we had hoped to give exceeds our price point.

I know that "fair" is a parental myth that leads to disaster.

From personal family experience, I know that a parent's desire to spend exactly the same amount on every single child often leads to discontent and thanklessness. I would much rather focus on the individual wants and needs of each child than center my attention on FAIR. My children sincerely enjoy seeing each other receive gifts on Christmas...or throughout the year...and have developed a "rejoice with those who rejoice" (Rom. 12:15) attitude. Obviously, Christmas gift-giving is only the tip of the iceburg when cultivating that mentality.

Although our goal is to spend about $50 on each of the kids, sometimes I am able to find fantastic deals on certain gifts and not-so-fantastic deals on others. In the end, I always end up over-spending by a few dollars for a couple kids and under-spending for the others. But, since FAIR doesn't always mean EQUAL, I never fret the monetary unbalance. I might spend more on my older children this year and more on the younger children the next.

In the end, when purchasing presents, my goal is to provide gifts I know each person will enjoy and appreciate INDIVIDUALLY and TOGETHER while maintaining a healthy and Biblical perspective of gift-giving and Christmas spending.

I enjoy a memorable and anxiety-free Christmas.

This year, by combining some throughout-the-year buying and one big shopping dash December 1st, I had all of my gifts bought, wrapped, and under the tree by December 2nd. Although this little Christmas miracle was quite an anomaly, my determination to stay within our Christmas budget was not.

Here's what's under our tree...

The Hubs ($30 budget)

  • $19 hockey stick, puck, and tape (on clearance) 
  • $7 sweater (on sale, plus a $10 off coupon)

Me ($30 budget)

  • I'm hoping for a Chinese checkers set and/or a thermal coffee cup that ACTUALLY keeps my coffee hot...we shall see...

Sweetie Pea ($50 budget)

  • GOLD: $30 Razor Scooter (on sale, plus a $5 off coupon) 
  • FRANKINCENSE: $5 family movie (used on eBay) 
  • MYRRH: $15 Adventure Bible (on sale, plus a half off coupon) 

Super Boy ($50 budget)

  • GOLD: $37 Compound Bow set
  • FRANKINCENSE: $7 one of a two pack Walkie Talkie set (on sale) 
  • MYRRH: $.25 Gotta Have God devotional for boys (I had this on my gift list and found it at a used book sale...completely unused!)

Blonde Warrior ($50 budget)

  • GOLD: $17 Turtle Shell, $10 Spy Gear Watch (on sale, plus a 15% off coupon) 
  • FRANKINCENSE: $7 one of a two pack Walkie Talkie set (on sale) 
  • MYRRH: $25 Adventures in Odyssey Truth Chronicles (I received a $5 gift card for my next purchase which I applied to my niece's Christmas gift.)

Greased Lightning ($50 budget)

  • GOLD: $14 Toy drill set, $9 additional tools in the set (on sale) 
  • FRANKINCENSE: $7 one of a two pack Walkie Talkie set (on sale) 
  • MYRRH: $13 The Preschooler's Bible (on sale)

The Dude ($50 budget)

Some quick mental math shows that I still have $21 in my husband/kids budget. I might decide to apply that surplus to purchasing a family game, adding it to the Christmas activities budget for extra cushion, or adding it to our Gift to Jesus offering. Either way, my decision will be guilt and anxiety free knowing that I have maintained my Christmas budget AND purchased gifts my children will appreciate and enjoy.

*As a side note, in our home ALL toys (if age appropriate) are toys to share. So, what one child receives is enjoyed by everyone. Obviously, each child has certain preferences for his/her particular Christmas gift since it was bought with him/her in mind, but everyone can play with it.


  1. What an amazing idea that I would LOVE to see! I do not have children yet, but I have 11 nieces and nephews. I tend to buy gifts to help their parents with Christmas. Most of what I buy I look for through the year. Last year, I got a huge 30 gallon trashbag of gifts (11 kids and their parents) for around 40 or 50 dollars. It just takes some doing and planning. Much better than paying hundreds of dollars on Christmas gifts. Next year...I am crafting/crocheting/knitting all my gifts.

    1. I love homemade gifts! Good for you for starting this plan early.

  2. Thank you for being so open and sharing with us! It is so easy to get caught up in spending money in the moment. I love to buy gifts. We also spend $50 on our children for the main gifts. Do you do stockings? Thanks again for the encouraging post. Blessings! Have a wonderful Christmas.

    1. Yes, we do give a few stocking gifts. These are usually necessity type items like new "fun" toothbrushes or hair clips. I pick these up on clearance and for FREE after coupons throughout the year, so I don't usually add the stocking gifts into the budget. I have also found many things at garage sales and books at used book sales that I include...again nothing more than a dollar.

      But, it would be very easy to do. All you'd have to do is determine a price point, divide that number by 12, and add it into your Christmas budget.

  3. This was an eye opener that I needed to see. Thanks so much.. I have done Dave Ramsey's plan for awhile and kinda forgot to keep up with it...We eliminated so much debt (got rid of all the credit cards) using his plan. Thanks again for openly sharing about your financial situation sometimes it is difficult to do so...I am gonna sit down tonight and do some planning for my family. Thank you so much. Enjoy your Christmas with your family. :)

    1. Yes, candidness and vulnerability is not always easy. But, in the end, I have to remember that IT'S NOT ABOUT ME. I am called in Revelation 12:11 to build the Kingdom with my open and honest testimony in order to encourage and equip others. So, if my past financial mistakes help others in their faith walk, well then, I guess I am willing to be vulnerable.

  4. Great post! I am definitely going to sit down and plan next years Christmas budget with the hubs before the new year! This year has been out of control and I don't want that struggle year after year as I fall in to the traps of consumerism. I see the value in planning and having clear goals and expectations. Especially when I want to set an example for my children that leads to attitudes of appreciation and not the need for satiation. Thank you so much for sharing so candidly!

    1. You're welcome, Sarah. I'm glad I've sparked some thoughts of intentional planning. I can't tell you how much it has helped us!

  5. Great read...We have completed the Dave Ramsay course a few years back and have incorporated many of the techniques. We had planned in the summer to put away monies for the holidays, however some car repairs, and appliance replacements prohibited that. We still provided holiday gifts without credit cards. I will take a page from your book and sit with my husband in January and draw up a plan. I think a separate account is very wise. I appreciate your post.

    1. Thank you for saying so, Adrienne. Vulnerability can be scary. So it's nice to know it has been so well-received.

  6. This was awesome and VERY helpful. I would have never thought to do this and I am not sure why. I think many people do not think to do this as well...thank you! Are there other posts on your blog about budgeting? I would love to read those and get some ideas as well :)

    1. Elizabeth, to be honest, this has been my first budgeting post. (Although I have written a two-part series about teaching my kids the value of money and receiving allowance.) But, it appears I have struck a chord with many. My in-box has been flooded today and I've become acutely aware that this might be a homeschool topic worth talking about. Thank you for the nudge. I'm already brainstorming some more things I'd like to share in the future.

  7. Thank you for your post and your transparency, it really is an encouragement. We also live off of a cash only system. It sure helps to control the wants and needs. I usually scramble the last few months of the year to provide the monetary means needed for Christmas, I think my hubs and I will sit down in the beginning of the year and try what has worked for you all.

  8. I love these ideas! It's something I wouldn't have thought of (planning at the beginning of the year).
    I second the thought that Elizabeth had about reading more of your budgeting ideas. My husband and I have been married almost 13 years and have lived with his parents for, well, longer than I want to admit, due to our stupidity with money. We are slowly digging our way out of debt but could always use encouragement!

    1. I've got a few things in mind. Thanks for the encouragement.

  9. We also had a $50/child budget this year! Here's how we did it: http://www.ordinarysarah.com/2013/12/we-only-spent-50-per-kid-this-christmas.html

  10. I used to be able to do Christmas for $15 a child when they were little. My husband has gone back to university and we were VERY tight on money. But as they have gotten older, this is simply not possible any more. Once they are teenagers (and we have really great teenagers who don't "expect" certain gifts, and do appreciate whatever we give them) it isn't just about a toy anymore. Even with a lot of careful shopping and creativity, our older kids' main gift is now averaging $100-$150. These are good things that are investments in their hobbies such as a sewing dress form or a good quality microphone for digitally recording their musical efforts, or "under-armour" clothes to wear under their hockey equipment. Thankfully, we also do not worry about spending equal amounts of money, and they younger children who still love a toy (which is sometimes second hand), balances out the more expensive older children's gifts. Our children also get a smaller gift in their stocking, a small gift from the sibling who picked their name from a hat, and a new book. One question: When you give a child a summer-type gift such as a scooter or a bow and arrow set, do they have a place or opportunity to use it during the winter?

    1. We do keep those summer time gifts in mind and try to find alternative ways of using them indoors if need be. We have many summer/spring birthdays in our family, so we usually save things like bikes (secondhand at this point) for birthdays.

  11. I wonder how much you spend on nieces and nephews? And of course, how many of them are there? The bigger the family, the smaller the budget for each kid. I think some look at my strangely because I limit the nieces and nephews to $25. each. And honestly, I should be spending less than that!

    1. I have eight nieces and five nephews. But, I don't buy them any Christmas gifts. Our families have all decided that it's just not what we want to focus on. Our kids just don't need any more stuff. They need time together.