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Christmas on Credit

Christmas on CreditIf you’re anything like me, you’ve been spending a lot more the past few weeks than you usually do. More toys, more clothes, more gadgets, more books, more travel, more food and treats — more of just about anything.

If you’re anything like most Americans, you’re using a credit card to fund a good chunk of the spending.

Then you spend the next few months trying to dig yourself out of debt. Here’s some common sense Christmas spending advice.

If you insist on spending more than you have on Christmas (why?), then at very least find a competitive rate on your credit card. Or better yet, find a promotional rate that is zero percent or close to it.

Rather than going into debt for Christmas, how about planning ahead. Decide how much you reasonably want to spend and set 1/12 of that aside every month. Make purchases (on sale) throughout the year when you see the perfect gift — and pay with your Christmas fund.

To stretch your budget further, try my trick. It requires self-discipline but can make your budget go even further. I buy all our groceries, household needs, clothes, gifts — even some utilities — on annual-fee-free rewards credit cards. Then I pay them off in full every month, no exceptions.

Purchasing this way is free from bank fees. It also has a great kicker: a cash back bonus, frequent flier miles, or some other useful commodity.

As long as you can refrain from overspending, credit cards can be a great way to get an effective rebate on purchases.

{ 7 comments… add one }
  • DiNaRa December 16, 2011, 5:13 am

    That’s why I usually save money for the holidays during the year as I know that the presents are very expensive if they are good. I know that it is not easy to keep aside a pound, but at the same time it prevents from debts.

  • Roland December 16, 2011, 7:50 am

    It’s always difficult not to be extravagant at Christmas, and ending up suffering by having to pay off unaffordable debt for the rest of the year. It’s good advice to only borrow what you can afford and to pay it off as soon as possible, good post.
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  • Amber Mae December 18, 2011, 8:01 am

    Opening up a Christmas account can also be a good idea. It’s kind of like a dedicated savings account in that it’s a savings account with a higher interest rate and it requires you to put so much away every month, but it only lasts for a year -usually ending in December (thus why it’s called a Christmas account). Anything you don’t take out at the end goes back into your regular savings – extra money in the form of interest whether you use it for Christmas or not. My hubby was just telling me about it – doubt we’ll spend a lot on Christmas next year, (our total Christmas budget isn’t much more than the amount that you are required to sock away each month) but since it’s got a higher interest rate than dedicated savings right now we’ll probably give it a go for next year. 🙂
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  • Elle December 19, 2011, 4:52 pm

    Yea if you qualify for a low rate that would be great. My family doesn’t qualify for the best rates though.
    And it would also be great to be able to pay them off every month and get rewards. Right now I just can’t be sure of that.

    That idea about putting up 1/12 per month is a great one though. I will run that by my hubby. The only real problem with that it is would have to be hidden…so he doesn’t actually remember that it is there…otherwise something will come up…
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  • Alison Moore Smith December 21, 2011, 1:27 pm

    Elle, that might work. 🙂

    Sounds like you don’t have a lot of support in the living-within-our-means category. Maybe you can get your husband on board. If we don’t have the money for something, we just don’t get it. I’d much rather feel “deprived” momentarily than live with the extreme stress of debt.

    Your husband might benefit from finding these resources under the tree! Check out this first book, too!

  • Tony Taylor December 26, 2011, 10:09 pm

    I usually do start my Christmas shopping in the summer. It saves me from worrying around Christmas time about affording anything. I also do not use credit to make the purchases, although I see why some would want to take advantage of the rebates.

  • Anna December 28, 2011, 5:33 am

    WEll, when you have some loans already, is it really worth to take some more? i am afraid of any bank loans as I have mortgage and it is rather hard for me to pay it off.

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