$urviving Christmas: How to Avoid another Credit Card Christmas

by SMD 

Twas the day after New Year’s, when all through the house
Not a creature was stirring, just me and my spouse;
We mused at the holiday cheer we had brought
To all of our dear ones, with gifts we had bought:
From ties, scarves and sweaters to books and CDs,
All manner of lip-smacking delicacies,
The latest high-tech, packed with features and frills,
But now how do we pay off our credit card bills?

Poem from “Freeing Yourself from Holiday Debt

Someone once said that the definition of a fool is a person who keeps doing the same thing over and over while expecting different results. If that’s true, then most of us have been fools now and then. And around Christmas time the number of fools dramatically increases. Somehow we’re all surprised to find we have to put Christmas on credit cards AGAIN this year. Here are some tips and tricks to avoid another Credit Card Christmas.

1. Plan. Too late to start saving up for this Christmas? Fast forward a year from now, when you’ll say “I can’t believe I didn’t save up for Christmas- AGAIN. Now flash back to the present, and COMMIT to putting aside a certain amount per week or per paycheck for NEXT Christmas. Your bank or credit union might have a Christmas savings plan for you, or just open an off limits savings account. Even $10 a week adds up to over $500.

2. Budget. BEFORE you buy your first gift, set a very clear and reasonable holiday budget and then try something new and actually STICK with it. Make a list of everyone you might give a gift or card to, and decide who you really feel you want to get a gift for.

3. Get honest. Included in this budgeting process is taking an honest look at what you can healthily AFFORD to spend on gifts, and what motivations you have to spend MORE than you can afford. Is it out of obligation? Guilt? Pressure? Is real goodness coming out of spending more? Another question is how much more MEANINGFUL will a more expensive gift honestly be to them? If someone asked them 8 months later what you bought them for Christmas, will they remember effortlessly? If not, is there a more meaningful gift you could give them that would be less expensive? Maybe much less.

4. Cut back. What terrible thing would happen if you let people know your Christmas budget is tight this year, in order to dig out of credit card debt? I received a card one summer from my brother’s family. It said “In order to meet our financial goals, we are not going to be able to get gifts for the many family and friends that we love. We hope this is temporary and are grateful for your understanding.” Or less drastically just letting people know when it fits into conversation your Chistmas budget will be smaller this year because you are clear it’s time to stop digging deeper into debt.

5. Small but meaningful. Ever been in a situation where you got someone the most expensive gift, but when someone else gave them a little $8 nicknack, they cried? Point made.

6. Create. How about, as my parents did one financially difficult year, MAKING all your Christmas gifts. Simple, handmade gifts can mean a lot more, because you actually took the time to make them. It could be a photo album, writing a song or poem, something hand crafted or cooked, etc. And in this age of instant messages, texting and emails sometimes even a well thought out letter or list of fond memories is more meaningful than any gift. (For my mother’s 70th birthday, all the kids wrote down their favorite memories and we put it on some fancy paper and gave it to her. It meant more than any expensive gift we’ve given her. Creating a gift might also include a gift of time, such as coupons “This certificate is for 3 hours of yard work”, or baby sitting, etc. Offering to give your time shows you really care. It’s a bigger commitment, and more of a giving of your heart and energy, than money is. The true value of a gift is determined not by the amount of money, but the amount of heart.

7. Combining Gifts. Consider giving one gift to a family, to the kids, or to coworkers, etc. rather than separate gifts for each person. An office gift could be a fruit basket or a practical item all will appreciate at work.

8.Low interest short term loan. If you must go into Christmas debt, rather than using high interest credit cards, try to apply for a low interest short term loan at your bank or credit union. Beware of mortgage refinancing, where it may be lower interest than credit cards, but you usually end up paying for 15+ years of interest, which can eventually double the cost of your gifts! Some people find using low interest credit card special offers works well, but if you go this approach, you must make sure you understand the terms and conditions (also known as traps) and stay on top of it. Often for instance, those “no interest for 6 months” checks in the mail suddenly jump to 23% interest on a cash advance balance that remains until all other balances have been paid off. Ouch.

It’s not too late to look at a smarter way to handle the holidays. If not for this year, then for the next. Deep down, we all still remember, the last thing the holiday season is supposed to be about is financial stress.

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One Response to “$urviving Christmas: How to Avoid another Credit Card Christmas”

  1. Dr. Frugal on November 13th, 2007 8:50 am

    I think along with #3 (Get Honest) should be included “does Person X really need something”? I can’t tell you how many times friends, family, co-workers, all of whom had no business spending money on me bought something that ultimately I just had to throw away. It wouldn’t have hurt my feelings one bit had they gotten me nothing and I think I can safely say most people are like that–don’t waste your money getting them something they don’t even want just for the sake of giving them a gift.

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