What Your Christmas Wish Should Be

Posted on 18. Nov, 2005 by in Credit & Debt

I’m sure you’ve been working frantically to polish your Christmas list before you distribute it to all your family and friends – but I would like to challenge you to add something to the end of that list:

  • New Apple iPod
  • Black socks
  • Salad spinner
  • Subscription to PC Magazine
  • Get through Christmas without adding new debt!

The truth is with interest rates rising the temptation to put your holiday purchases on your credit card should be avoided at all costs! After all, the last thing you asked for was a huge credit card bill in January, right?

The average interest rate on credit cards now is 12.53% which is up from 11.94% just 6 months ago. Add to that the fact that this year, many major credit-card issuers boosted their minimum monthly payments to 4% of the balance from 2% and you have a greater incentive to avoid raising your credit card balances. So what can you do to avoid adding debt to your holiday wish list? Here are a few ideas that might help you out:

  1. Budget – This one can’t be stressed enough. Budget, budget, budget. You can do this a number of different ways so it doesn’t really matter which way you choose to budget as long as you do it. Personally I’ve done it a few different ways. One is to set a per person limit for immediate family. $200 for your spouse, $200 for your spouse to spend on you, $150 per child… whatever. Total everyone’s allocation and see if that amount fits within your overall budget. If you see that your current financial status can’t support that much and you see yourself forced to use a credit card to make those purchases, adjust the amounts. Another way is to set aside a yearly budget amount – $50 each month and $200 during December. If you follow your budget you might find that come December you have a little left over from previous months that you can put towards your holiday spending.
  2. Christmas Shopping

  3. Plan Ahead – This goes hand in hand with budgeting. Think back to what you spent on all your holiday gifts – from the tip for the paperboy to your great Aunt Gertrude’s gift certificate. If you estimate you’re going to spend that same amount this year, then start saving now. Take your total and divide by twelve to calculate how much you should put away each month in a high-yielding internet savings account and you’ll have a cookie jar full of funds you can spend on the holidays and not have to worry about adding to your credit card debt. Check out BankRate.com for the latest savings account yields.
  4. Prepaid Debit Cards – These prepaid,or “stored value” cards can be loaded up with cash and used just like a credit card – without the added debt. This is a shure way to make shure you stick to your budget – and it also makes a great way for your kids to shop as well without needing cash. Check out CardWeb.com to compare prepaid debit card features.
  5. Pay Off Debt – Consider spending a little less on your spouse’s present and giving him/her the rest in cash to put towards paying off those high-interest credit cards. I’m sure your spouse will be as happy as you to lighten that chain locked to your ankle!

I challenge you to use some of the ideas presented here – or come up with some of your own – to make your shopping sprees something fun and enjoyable and not something you’ll regreat when the credit card bill comes in January.

Christmas, shopping, credit card, debt, budgeting

3 Responses to “What Your Christmas Wish Should Be”

  1. Lindsay

    24. Nov, 2005

    I really need this blog in my life. I am subscribing immediately. Do you take requests for topics? 🙂

    From a fellow new 9ruler, congrats on getting accepted, I look forward to visiting your site often!

    P.S. your bean graphic at the top of the page looked like a bottle of pills at first glance… (suggested subheading: the cure for all of your financial ailments!) ha!

Trackbacks/Pingbacks

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