How to pay for Christmas without sliding to financial ruin is about understanding the best and worst options available.

I’m not going to preach about responsible spending and how Christmas shouldn’t be about material things. We’ve got several resources for how to budget and save money on the blog but it may be a little late as we get closer to the holiday shopping season. Us grownups might be able to find the joy in a simple gift from the heart but try telling your five-year old why he didn’t get anything but a few pairs of socks.

While the longer-term goal is to get your finances in order, to start saving and spending wisely, worrying about money is the last thing you want to do during the holiday season. Unfortunately, a lot of companies are going to be watching for people in your situation and will be waiting to take advantage.

Figuring out how to pay for Christmas when you don’t have any money and without ruining your finances is about knowing which are the best and worst options available.

Managing Christmas Expenses on a Low Income

Christmas is one of the most expensive holidays of the year. There are gifts to buy for many people, grocery bills are exorbitant due to holiday food items, and utilities cost more because their use increases at this time of year. This spending trend creates a problem for those who don’t have much money, as they can struggle to pay their bills over the winter months.

How do you manage on a low income around Christmas? If you’re struggling with finances or know someone who is, read these tips on how to make it through the season without going into debt.

1) Plan Ahead for Your Holiday Purchases

One way to save money during the holiday season is by planning your gift list well in advance. This can be a great way to ensure you don’t buy things for people who don’t deserve them. It also allows you time to shop around for your gifts, as well as save up money from your bi-weekly or monthly paychecks.

2) Instead of Shopping, Make Gifts Instead

One easy way to save money during this festive season is by making homemade gifts rather than buying them. Homemade presents are not only very thoughtful but often much more economical than store-bought items. For example, if you plan ahead and make gifts with materials that cost $1 each (or less), you can easily save over half the price compared to buying these same items in a store. Sugar scrubs and lip balms are perfect for this type of gift, and can be made ahead to reduce stress.

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3) Heat Your Home Efficiently

The winter months are associated with high energy bills due to the cold temperatures. One way around this is by installing double-glazed windows in your home. This will significantly cut down on your heating costs, and save you money in the long run..

4) Turn Off Lights When You’re Not Using Them and Only Use Energy Efficient Appliances Around Christmas Time

Another way to cut down on energy costs during the holidays is by turning off lights when they aren’t needed (e.g., when you leave a room). If you must use lights at night, try using battery powered candles or Christmas lights instead of plug-in models. If you’re cooking or baking around this time, be sure to turn on the oven light as it uses less energy than leaving the door open.

5) Be Careful When Driving During Winter

During snow and ice storms, roads can become very dangerous to drive on. If possible, don’t leave your home unless absolutely necessary and try not to travel long distances during these times. Consider using public transportation or ask a friend if you can borrow their car for the day.

If your home is too chilly at night and you feel unsafe sleeping in such conditions, call your local social services office or local crisis line for information about shelter services in your area (these places often offer overnight accommodation).

6) Don’t Overbuy Groceries This Time of Year

The holiday season is a time when food-stores often offer huge discounts on their best products. But if you go overboard during these sales, you can end up wasting a lot of money. Be sensible about the things you buy and only use coupons for products that are heavily discounted to save even more money. It’s better to have a small fridge with a few extra items than no fridge at all because you’re overwhelmed by the amount of food inside it!

7) Work Out How You Can Save Even More Money

Everyone wants to have an enjoyable Christmas but being so focused on this goal that you spend beyond your means can be dangerous financially. If there’s a limit on the amount of money you’re willing to spend, stick to it. If your budget is already stretched thin throughout December, don’t borrow from next month’s allowance.

How to Pay for Christmas: Worst of a Bad Situation

Using payday loans to pay for Christmas shopping, or just about anything, has got to be the worst financial decision ever. That weekly rate on your loan may seem lower than other rates available but it amounts to a upwards of 500% over a year.

I’m surprised there are not more safeguards and laws against this time of predatory lending. Over 90% of the payday lending business in the United States is from people that have five or more loans a year. That business generates $3.5 billion in fees each year on people that fall into the trap and are never able to get out.

Credit cards offered by the stores themselves are the next in line for worst ways to pay for Christmas. That 10% immediate discount on your purchase is pretty tempting but rates on these cards are higher than most other credit cards. Card website Creditcards.com reports the average APR on credit cards from the largest retailers at 23.2% and more than 8% over the average for credit cards in general.

How to Pay for Christmas: Bad but Better Options

While not quite as bad as store credit cards, general purpose cards are not a great way to pay for Christmas either. Even if your rate isn’t above the average 15%, credit cards are revolving lines of credit. This is a problem for two reasons:

You don’t have fixed payments or a payoff with credit cards. You’ll be tempted to keep spending and may never be able to pay off the debt.
Because of this uncertainty, revolving credit hurts your credit score worse than other loans that have fixed payments and payoff dates.

The upside to using credit cards to pay for Christmas is that you can actually make money if you use them responsibly. Most cards will offer low rates for the first year and cash back programs of 1% or more. If you pay off your credit card debt each month, you won’t pay any money in interest charges and can get cash back or points to pay for other purchases.

Of course, we all say that we’ll use a card responsibly but the truth is usually a little different. It’s too easy to go over-budget on your spending and then realize you won’t have enough to pay the debt at the end of the month.

How to Pay for Christmas: Making Money and Short-term Loans

how to pay for christmas shopping no money

While still not the best way to pay for Christmas shopping, Personal Loans are a better option than most others. Personal loans are fixed payment loans that have a payoff date and generally much lower rates than credit cards. In fact, debt consolidation to pay off high-rate card debt is the most popular use of personal loans.

Peer lending websites like Lending Club and Prosper have boomed over the last year for their lower rates and investing option but credit requirements are fairly high. You’ll need a credit score of around 620 or higher to get a peer lending loan. If you qualify, rates start at just over 5% and range up to 29% for bad credit borrowers.

The higher credit requirement is the most common complaint I hear about peer lending sites like Lending Club. Bad credit borrowers have had more success with Personal Loans.com which will accept borrowers with credit scores as low as 580 FICO. The site is a lending aggregator, meaning it lists your loan and helps find the best rate from different borrowers.

A trick my wife and I have used for years is to only use prepaid cards to pay for Christmas. Try putting your budgeted shopping amount on a prepaid card, maybe with money from a personal loan, and only taking that card with you while shopping. It will help keep you from overspending and facing the pain of those January credit card bills.

The best way to pay for Christmas when you don’t have any money is to make more money! The best paying freelancing jobs usually take months to set up and get paid but there are lots of odd jobs you can do to earn a little extra cash. If your kids are old enough, try getting them involved in your side-gig as a way to spend time together. Try selling some of the stuff sitting around the house on Craigslist to pay for this year’s Christmas shopping. Check out the second-hand shops to see if you can barter or trade for a like-new Christmas.

You can still have a happy holiday without taking on back-breaking debt but understand your options on how to pay for Christmas when you don’t have any money. You aren’t confined to just one of the best options above. Figure out which work best for your situation and resolve to turn over a new financial leaf in 2021.

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How to Pay for Christmas When You Don’t Have Any Money