How to Cure a Holiday Spending Hangover?

Did you indulge in a few too many purchases this Christmas? Between sales for pre-Black Friday, Black Friday, early-bird Christmas, and the day after Christmas, it was almost hard not to overspend, unless you possess an iron frugal will.

We made it through the spending season mostly within budget, but there are a couple areas I’ll need to review in planning next year’s budget, and the corresponding contributions to our Christmas sinking funds.

In years past, we often blew through the budget and financed the remainder of our gift purchases on a credit card. Judging from the amount of swipes I saw in the check-out lines, I can assume we were not alone. Even in what most consider to be a fragile economy, there didn’t seem to be a shortage of shoppers willing to finance Christmas on their credit cards this year.

Assess the Damage

I’ve found the best cure for a holiday spending hangover is to address the damage head-on. No avoiding the bills until January 30th. No pretending it didn’t happen.

Between now and January 1st, figure out where you stand – how much damage was done. Did you blow through your budget and now find yourself low on cash? Did you rack up more credit card debt than you intended? Maybe a little of both?

Use, or even a homemade spreadsheet, to take an updated inventory of your household finances. If you are able to transfer some money from savings, without jeopardizing your emergency fund, consider paying off your credit card debt before the New Year – debt free is a great way to start a new year!

If you don’t have enough cash around to pay off debt in one fell swoop, now is the time to devise a debt repayment plan for the coming year. How much will you have to pay each month to be debt free by April? Don’t let holiday debt hang around; it winds up becoming permanent debt, and two years down the road you’ll find yourself still paying interest on Christmas 2011 purchases. Not fun.

Update Your Plan for Next Year

Once you have addressed the damage done this year, consider updating your holiday spending plan next year. We underestimated our budget a bit for presents to extended family members and friends for which we wanted to give a gift. We also underestimated our “giving” budget, as we felt compelled to help beyond that for which had saved.

I don’t regret either decision, but I do want to build it into next year’s budget, because the earlier you start planning for a big expense, the easier it is to save for it.

Consider the following example:

Let’s assume next year’s Christmas shopping budget will be $600. If we start saving now that looks like $50 a month for the next year. If we wait until July, we’ll need to save twice that amount, $100 a month, to hit our goal. That’s a big difference. And it isn’t like Christmas sneaks up on us; it comes around every December 25th.

If you haven’t already created a separate savings account for these types of annual (or nearly as infrequent) expenditures, I highly recommend it. We have an online savings account that allows us to create a sort of subaccount where we save for infrequent expenses like car tag renewals, Christmas shopping, quarterly estimated self employment taxes, etc.

The sinking funds are funded by small contributions all year long, and when the expense is due, we simply transfer the money to our checking account and pay for it with cash. This has a way of smoothing out large budget blips, and reducing the likelihood of a spending hangover the next time around.

Before the New Year has us back in “holiday mode,” take a few days to reflect on this year’s holiday season. Hopefully, gifts will play but a small role in those memories, and instead you have happy memories of time spent with loved ones.


  1. Using a credit card doesn’t always mean someone is financing via it. I went through a period of carrying zero cash using the mentality of if you don’t have it, you can’t spend it. It worked pretty well until I hit a few places that only took cash and weren’t close to an ATM. Worst was a car park 🙁

  2. I am glad I found this site. Love it..!!!

    I spent a tad too much but I no longer rent my downstairs apartment the last few months so my electric and gas/heating bills has been way less; so today I stopped the balance billing for those two.

    So now I will not have those bills for two months since the money were in favor of me when I stopped the balance billing. This will cover the money I spent on gifts and food.. for family members.

    And pay it all off. I also will be getting some free gift cards for earning reward points.. that I will use for a birthday gift for my teen son’s birthday in January .. to stop the spending.. !!

    I love being frugal because frugal is not being cheap but just creative in spending and still be generous.. !!!

  3. The problem lies in our generous nature. We want to give and think our gift will make the person feel better. That might not be true. They might be just as happy with a gift that costs less, but we want to feel really good about giving. So while other people’s expectations are part of it, the larger part is accepting that we are still nice people when giving a smaller gift.

    You can budget more as you suggest, or you can rethink the whole thing. The hardest part is changing our own expectations.

    • Yea, fully agree,

      People just give because otherwise they think

      “What will they think of me if I give nothing..?..”

      The secret of life is to know thy self. Do what you think is right, not wha other think is right..

  4. I set each person on my list at a certain top dollar limit … that was HALF of last years amount. (long story, but it was tighter this year). As long as I stick to that amount per person and not give in to the temptation to ADD people to the list at the last minute, it all goes well. In fact I did better than usual, so I am happy to report my Christmas Shopping hangover was almost non existant!
    I didn’t give in to guilt or lust this season! Hooray!

  5. A well thought out letter is a fantastic idea to mark a special occasion, rather than a gift. I still cherish a 6-page, handwritten letter my grandfather gave me on my 20th birthday. It was filled with nuggets of wisdom and I often reference today – some 15 years later.

  6. Tip… No hangover here.. Cuz each month i buy (or reserve cash) for one fam. member YEAR ROUND and take care of one holiday item as well: shipping boxes, wrapping paper, greeting cards, family photo prints, etc. My only required expenses in Dec. are shipping!!!! There’s plenty of wiggle room in my budget for last minute “social pressure gifts” like hostess gifts, “secret santa”, and so forth… All of which makes the holidays a lot less stressful and a ton more enjoyable. Black Friday? Have never shopped it in my life. I still get good deals though. They’re out there if you look for them year round. I might pay $5 more than the next person but I have $20 less stress!!

  7. We did pretty good this year and had a modest Christmas. I recently heard of the three gift approach–one to wear, one to use and one want, and that is what we went with. Plus, the kids get so many presents from well-meaning relatives, there is no need for us to buy a lot.

  8. I’m waiting for the hangover to hit my coworkers. I cannot believe what some of them spent for Christmas. I heard one woman say today “I spent over $2000 and now it’s over and I don’t feel like anything happened”. I just cringed and didn’t say anything. Other people have been buying all sorts of stuff online since Black Friday. Those bills will start to hit soon.

    Our family decided minimal gifts & supported local charities instead this year. I feel good about that.