Christmas Time and Credit Cards

Each year, millions of folks around the US and Canada reach into their wallets and pull out their credit cards to help finance the gifts that they will be giving for Christmas.  Even if they don’t have money in the bank to cover the costs of this year’s sleigh-load, parents certainly don’t want to leave their children high and dry on Christmas morning.  The end result is that many folks find themselves broke and defeated at the end of the month, with stacks of credit card bills and no way to pay them. If this story sounds familiar to you, then you are not alone.  We have been repeating this pattern ourselves for the better part of the past decade.

This year, we tried our best to bring some sanity to the season, and to emerge with our plans for debt freedom intact.  Michelle and I agreed that we weren’t going to get any gifts for each other, instead opting to invest in some improvements to our house when we get out of debt in the spring.  Next year, we will set aside a small allotment for gifts for each other, but we decided it just didn’t make sense this year.

When purchasing for extended family members, we tried to find thoughtful gifts that didn’t cost an arm and a leg, and were mostly successful.  For our own kids, we did spend a total of about $350 in total, but we did pretty well within that amount.  Michelle found an adorable toy for the baby on Craigslist.  We also purchased her a half dozen board books on half.com, since is already such an avid reader.  Babies and toddlers don’t really know the difference between new and used.  For our middle son, we found a nice microscope, a flying helicopter, and a few board games.  Our oldest son got a new bike that he desperately needed, which we found on sale at the local sports store for about $125.  You know that you have done a good job when you hear someone exclaim “Best Christmas Ever!” on Christmas morning.

A Christmas Savings Account

The plan for Christmas spending that makes the most financial sense, is to setup an account that is specifically just for holiday gift buying.   Try to come up with an accurate total on how much money you spent this year, and make it a goal to fund your account with that amount by December 1st of next year.  It might only cost you $50 a month, and spreading this out over the entire year will make sure that you don’t have to scramble for the credit cards when December rolls around.  The spending that goes along with the holiday season is only a budget buster if you let it be!

Credit Cards

I will admit that we did use credit cards to purchase many of the items this year, but this year it wasn’t because of necessity, it was to earn rewards points.  I have discussed in the past about whether or not it is too dangerous to use credit cards for their rewards points when you are trying to get out of debt.  We eventually reached the conclusion that as long as we pay for the expenses immediately, and carry a zero balance at the end of the month, there is really no harm in it.  We certainly don’t go overboard, but I have found myself regularly purchasing everything from gas to groceries with rewards credit cards, and then paying off immediately.

Like many folks, we did a portion of our Christmas shopping at Target and a portion at Amazon, and we have cards that provide a nice discount at each of the mega retailers.  If you are trying to find a card with a nice rewards program, using a site like Totally Money or performing a Google credit card comparison search, can help you find one that works well with your shopping habits.

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