It’s that time again. Even though it comes consistently at the same time every year, Christmas somehow always seems to sneak up on us. We say that next year we will save money throughout the year to reduce the burden of all the additional expenses related to the holiday, yet somehow we never do it.

Since this year is probably no different, I thought this would be a good time to share some tips on how to enjoy a debt-free holiday season. By having a game plan prior to the first swipe of the credit card, you too can have a wonderful yuletide celebration without the dread of opening your mailbox in January.

The first step to any good financial plan is to look at your historical spending as well as your current discretionary income to develop a Christmas budget. People new to this whole budgeting thing may have no idea what was spent in previous years. If that’s the case, dig out some bank and credit card statements from last year and do your best to get a ballpark number. Once you know what you have spent in the past, it’s time to figure out what you can spend this year. Whatever you decide, it must jive with your overall monthly budget. Remember, things like rent and utilities still need to be paid, so be realistic in what is actually available to spend on Christmas.

Once you have your overall Christmas budget laid out, you should break this budget down into subcategories. Most people, when thinking about Christmas spending, only consider the cost of gifts and fail to factor in other seasonal expenses such as food, decorations, entertainment, etc. To have a truly realistic projection of what the holiday is going to cost, all of these additional expenses must be included.

Next, since gifts usually take up the lion’s share of your Christmas budget, you should sit down with a pen and paper and plan all gift purchases prior to spending a dime. Not only does this include who you will buy a gift for, but also how much you will spend for each person. This is often the most difficult part of the entire budgeting process. Because when you start to do the math you will often realize that some people you wish to buy gifts for will have to settle for a Christmas card, and the gifts you do buy for people may not be as extravagant as you would like.

Finally, you must track your spending as you go. As much as you plan in advance, adjustments will have to be made. Some things will cost more than you think they will, and unplanned expenses will always pop up. But when those things happen, it doesn’t mean the war is lost. If you are tracking your spending as you go, you will just have to make additional adjustments to your overall Christmas budget. Remember, all that has to happen for the budget to still work is for these increases in spending to be offset by decreases in spending in other areas of the total budget.

As it’s said, “If you don't know where you are going, any road will get you there.” This Christmas, my advice is get yourself a roadmap and follow it. You’ll be amazed how much more enjoyable the season is when you’re paying for it in cash.

(Advice is intended to be general in nature.)

Luke Davis is with Stewardship Capital in Independence.