Holiday Hangover

Thanksgiving, Christmas, New Year's Eve, Hanukkah. The holiday season can be an awesome time of joy, family connection, gift giving and gift receiving. However, it can also be a time of immense stress. Sure, there is the unmitigated stress when your in-laws move in for ten days and try to redo your interior decor while spoiling your children beyond belief. Many people also suffer financial stress, especially as the holidays fade to memories and the credit card bills begin arriving.

This month we'll look at the Holiday Hangover, the not-so-quaint term associated with the post-holiday realization of how much debt was accumulated.

The Problem

The Christmas season is known as a season of giving. Homeless shelters and food banks see donations soar during the season as people recognize how fortunate they are and willingly share in an effort to help the less fortunate. We also share gifts with friends, families and coworkers.

Many people do not set aside a specific cash budget for these expenses, so they get trapped into using credit cards to finance their gift-giving. Using credit cards means people easily lose track of how much they have spent, and they are less sensitive to how much they spend. Therefore, when the bills start coming in January, the joy of giving is quickly replaced by the pain of paying.

It seems like the problem is even worse now, as our Christmas gifts tend to be more expensive. Ten years ago, kids were happy with a $50 handheld electronic game. Now, Playstations and Xboxes cost six or seven times that. Home theaters used to consist of a 32" television and a stereo for $1000; now, they are 46" flat screens with Blue-Ray players and surround sound systems, costing $2500 or more. In short, toys for kids - young and old - have skyrocketed. Too often, these big ticket items end up on a credit card.

Making Payments

If you have found yourself with a Holiday Hangover, there is little you can do to change it. Sure, you could return some of the big items and have the amount credited back to your card. But, it could be pretty uncomfortable to explain why the Playstation from Santa has to go back to the store. So, that means you have to find ways to pay down that debt.

Start by looking at ways to save a few dollars here and there. Most people don't realize that they waste money through their habits, so look at your spending with a very critical eye. For example, my workweek is four ten-hour days. I like (really need) a cup of coffee on the way in. Stopping at Starbucks would cost about $10 a week; bringing coffee from home in a travel cup costs less than a dollar. What about eating out? Eating at work can cost $10 a day, or $40 a week. Packing lunch and keeping it in your cruiser or office can cost $3 or so a day. That’s $28 a week in savings. Combine this with the coffee savings, and you have an extra $145 a month towards your debt.

You can also look at your regular bills to see if you can save. The telephone companies love for you to get all of the extras, but how much do you need them? Is it worth $15 a month for Caller ID, call-waiting and unlimited long distance? We don't even have long distance on our landline phone, because we use cell phones for long distance calls; the minutes are already paid for and include long distance.

Look at your cable bill. Are you paying $30 a month for a few premium channels and additional channel groups? If so, ask yourself if you can actually do without the channels. The channel packages can be a real eye-opener; you'll probably find you are paying $20 a month to watch maybe four extra channels regularly.

Pinching here and there, especially in your habits and bills, can add up to $200 per month or more. That makes it much easier to pay off your credit cards and eliminate the Holiday Hangover.

Plan for Next Year

There is no time like the present to start planning for next Christmas. After all, you know it will come, so why not start setting aside the money now? Some banks offer Christmas Savings accounts, where you tell the bank to take a fixed amount of money out of every paycheck. You can then withdraw it during the holidays to start buying presents. Or you can use a gift envelope, where you actually put cash in an envelope (ours is actually labeled "Gifts") every week or paycheck. With interest rates as low as they are now, you are not sacrificing much interest if you use the envelope system.

If you set aside just $20 a week, you can have about $1000 saved for next year's presents.


The Holiday Hangover is a common occurrence. If you suffer from it, you need to understand that you are not alone and that you can avoid the trap next year. First, look at simple ways to save money and apply these savings to pay off the credit cards. Then, start saving money from every check to prepare for next Christmas so that you can avoid the problem next year.

Hangovers always hurt; here's hoping you recover from the Holiday Hangover quickly and that you avoid the New Year's hangover. I wish you a Merry Christmas, a Happy New Year and remind you to be safe.