Debt for the Holidays

It’s that time of year, endless commercials wanting you to spend, spend and spend some more. It’ll make you feel good, your loved ones deserve it, you deserve it.  Yeah, yeah, yeah, they don’t mention that all those good feeling disappear when you see the credit card bill in January. Is debt for the holidays what you really wish for?

Giving thanks for no debt

Thanksgiving is my favorite holiday. It’s all about cooking, eating, watching football and hanging out with family. We host it at our home so I don’t even have to leave. We go all out making as much as we can from scratch. We even get our kids involved, although they complain I think they’ll appreciate when they’re older.

We make homemade stuffing, butternut squash (from our garden), candied carrots, sweet potato rolls, and sweet potato pie. The carrots and sweet potatoes come from our local CSA. I even make the pie crust from scratch.  My Mother-in-law brings her homemade mashed potatoes and applesauce.

When dinner is finished we go around the table and say what we’re thankful for. That’s what the holidays should be about, not running around stressed, spending money, fighting traffic and crowds, getting into a financial hole.

I’m anti-black Friday. Our tradition is to take a long hike, the kids complain about that too. It also helps to work off all the food. Now I know, before you post some comments below, there are people that make Black Friday a family tradition. I know of many families that shop together. That’s great, but to now get to the point of the post, have a spending plan in place.

Debt: The financial bottom line

I noticed that the holidays cause even the most fiscally disciplined to lose their heads occasionally. I’m guilty of that as well. I admit you gotta live a little bit, but don’t make it an annual event. You don’t want to be still paying off Christmas debt in April every year.

You need to plan ahead. Put a spending plan in place in January. Stick to it no matter how tempting it is. The key is to not use credit cards or at least be able to pay them off and not carry a balance. Obviously, credit cards have made spending much too easy. Please note, buying gifts is not an emergency, so don’t think of tapping the emergency fund!

Imagine this scene from a previous time

Back in the old days when my grandparents wanted to buy gifts, after walking to the store, barefoot, uphill both ways in the snow, they needed cash. They didn’t have a credit card.

They had two options purchase on layaway or save throughout the year in a Christmas club. I did a Google search and the Christmas club and layaway options are still available through a few banks and retailers.

A Christmas club is just another name for a special savings account. An account that gets even less of a return than a regular savings account, is that possible? It usually has other restrictions such not having the ability to withdraw until November 1 without penalty.

In a layaway, which I’m surprised is still being offered, the retailer reserves it and you make weekly or monthly payments. There are fees involved with a layaway. I have no idea if that was the case back in the old days or not, but for a big ticket item, it may be better than carrying a credit card balance.

Debt was viewed much differently back before the 1970’s when the credit card industry began to boom.

Make a list and check it twice

Although there’s still time to get your spending organized this year, if you’re a late shopper such as me, to be effective, you should build all gift-giving into your monthly budget.

This should be your plan: On December 26th, make a list of each individual, the gifts you purchased, and the amounts. You may be surprised by the total. Work a realistic holiday spending amount into the following year’s budget. Sounds simple, doesn’t it? Easy to create, but you must be disciplined to execute the plan.

Don’t begin the new year with a debt hangover. If you can eliminate debt for the holidays, you won’t need to make a spending resolution on New Year’s Day.

If you have any questions or feedback or would like any of my secret Thanksgiving recipes, leave a comment below.