You Don’t Have to Cancel Christmas, but…

Making a list and checking it twice could result in the best gift of all: a debt-free New Year.

The two most important things we need to do to survive the tough economy is to focus on building up emergency savings and paying down credit card debt. However, with the economy still dependent on consumer spending as a driver and source of jobs, the pressure has already started to get us to start our holiday shopping and to spend as much as possible. The worst possible thing you can do with the economy in such a mess is to go  into deeper debt by using credit cards to spend money we don’t have. Here’s what you need to do to keep that from happening:

MAKE A LIST of every person you plan to buy a gift for, along with the amount you plan to spend on each person. Whether shopping for Christmas gifts, gardening supplies or groceries, never shop with out a list. Shopping from memory usually results in impulse buying, causing you to spend more money without being conscious of it.

REVIEW YOUR LIST. You’ve made your list; now do like Santa and check it twice. Focus on cutting people from the list, and/or reducing the amount budgeted for each gift.

Don’t worry; you don’t have to be a Scrooge. For example, some people on your list may appreciate a card, or even a phone call as much as or more than they would a gift. Are there individuals on the list from the same household? Buying one family gift instead of several individual ones will allow you to buy fewer gifts while still spreading holiday cheer. And be creative about giving gifts that cost little or no money; gifts of time, service or experiences. Examples include six weekends of babysitting so that your brother and his wife can keep the home fires burning; or agreeing to mow your favorite aunt’s lawn every two weeks for the new year, so that she won’t have to pay someone else to do it. If you have a gift, talent or hobby, consider gifts you can make yourself.

PAY CASH ONLY. When you’ve added up the total cost budgeted for your revised list, commit to funding the purchases without borrowing money—meaning without using credit cards. This is a good idea in any economy, but it is crucial to stick to this rule during the current financial crisis. This is the worst possible time to max out your credit cards; you want to keep your credit card balances as low as possible, ideally below a third of our credit limits. By paying cash only, you will be no deeper in debt once the New Year rolls in, and won’t be paying interest charges all the way to next Christmas.

If you can’t pay cash only, REPEAT STEP 2 until you can.

Am I saying, “Cancel Christmas”? Of, course not. However, unless you want to court further financial disaster, you must focus your holiday shopping strategy on 1) being organized and 2) resisting the pressure to borrow or spend money you don’t have.

  • Mandie

    “I’m thinking of consolidating all of my credit card debt totaling about $5,000 onto one card. Destroying one of my credit cards and keeping one plus the one all the balances will be transferred to. Leaving me with two cards. However, I want the credit card company to waive the balance transfer fee. Is this reasonable and do you think this is a good way to get rid of my credit card debt? The objective is to make larger payments and have more money to myself each month, rather than multiple credit card payments. Thank You.”

  • Me and my husband have filed for bankruptcy 2 months ago because we had so much debt and was having a hard time making ends meet. Then in Oct. my husband got laid off because he had to have another surgery done. I am the only one working and he has started getting unemployment and disability from his job but we are still having a hard time making ends meet. I have cut out some bills like cable, we put one of our cars in the bankruptcy and now have one car. I have been trying to find another job that pays more but I am even having a hard time doing that and I am a Registered Nurse(some people think nurses are so rich,not true). I have difficulty saving money because I always have to use it for something else. Thank God for Bank of Americas keep the change program or I wouldn’t have any savings ever. I need to know how I can establish my families emergency fund when we barely have enough money to pay bills and take care of everyday things like buying food and toilet tissue. Thank you

  • Bill McCartney

    Thanks, This has a lot of good advice. I am surprised to find myself reading Black Enterprise, but this article has important information for all of us. This proves, that poverty and bad times is color blind. SIr, thank you for a well written informative article. I was tempted to get a new credit card just to do Christmas. I knew better, but reading it in your article just shows the truth. BIll McCartney

  • Joufira

    since you dont make alot of money, the thing you will have to do is try to find ways to save as much of it as you can.Do you eat lunch AT work? If so maybe you can take your lunch a couple of days turn your heat/airconditioning down or off while you are at work for 8 or so hours per day.do you have tginhs in your house that you dont use? maybe you can sell them on ebayYou might qualify for the earned income credit when you file your tax return, maybe you can devote that ENTIRE amount to repaying you debt.Not sure what you took up in school but there are certain programs that will forgive your loans if you agree towork with them peace corps, certain teaching positions etcmaybe you can go back to your school and talk with your guidance counselors regarding this .When you go to the store to purchase groceries, GO with a list.Do you have a friend that you could split a membership with to one of those discount clubs if so you can buy toliet paper and other supplies in bulk and for even more savings you can split the cost of same with your friend.wash full loads of clothing only.I am sure you will be able to think of other tginhs you can doBest of luck to you

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