The Best Holiday Gift Is a Blessing to Stay Out of Debt

A public spending pact is the most effective way to avoid stressful holiday debt. And it has one of the greatest returns of all gifts you can give.

The Three Wise Men really started a trend when they brought gold, myrrh, and frankincense to that manger in Bethlehem all those generations ago.

Americans are expected to spend $682 billion on Christmas gifts this year. Much of that spending will be financed by revolving credit card debt, even though millions of people are still paying off credit card debt from last year’s holiday spending:

  • 24% of millennials still haven’t paid off last year’s holiday credit card debt.
  • 16% of Gen-Xers haven’t paid off last year’s holiday debt.
  • 8% of boomers haven’t paid off last year’s debt.

Americans in their 30s, 40s, and 50s are overwhelmed with an average $8,000 – $9,000 in credit card debt. This includes millions of people with top incomes and great credit scores.

Our Innate Desire to Give 

Hanukkah And Christmas

Despite my quip about the wise men above, winter holiday gift-giving predates Christmas and Hanukkah. Likewise, people have always been inclined to go into debt to finance presents of love and appreciation. However, our innate human desire to give gifts to those we love has been turned against us.

A huge variety of social triggers and expectations encourage people to overspend during the holidays. About 40% of shoppers overspent on holiday gifts last year.

Greater spending on gifts doesn’t equal greater happiness for either party

Google Pay 1

Americans leave the winter holidays with tremendous credit card debt. Yet there’s no evidence that lavish spending makes us happier – indeed, data indicates the opposite. As noted in Time Magazine:

Psychological research indicates being generous makes us happier, but to the extent gift-buying causes stress, it decreases your happiness. Your stress and unhappiness affects the people in your life, especially those who love you most.

An intentional holiday spending pact is the best strategy for avoiding holiday debt

A number of tactics can help people enjoy the holidays without taking on stressful debt. For example, certain budgeting systems set guidelines for giving. Mindset hacks (such as the 5 Whys) can also provide clarity on giving and spending.

However, budgets and hacks can fail, especially under the pressure of Christmas.

Be direct. Tell loved ones you only want them to spend a set amount on you this year – perhaps $25 or $50. Likewise, let them know you’re spending a set amount on them.

It may feel cheap or pushy to do this. But most people will welcome the guidance. It sets helpful expectations. It emphasizes creativity and knowledge of the other person. You’ll set a forward example. And science shows that making commitments public is one of the most effective ways to make them stick.

A spending pact is generous in the fullest sense

After all, you’re not just staying out of debt, you’re helping your loved ones stay out of debt. And that is a profoundly beautiful gift with endless returns.

Edward Shepard

Edward Shepard

Marketing Lead at Tiller. Writer. Spreadsheet nerd. Get in touch with partnership ideas at edward @ tillerhq.com.

Start Your Free Trial

"There isn’t another tool on the market that does what Tiller can do.”
Will Hinton, Google Review October 30, 2023