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Avoiding Christmas Debt

The Christmas season is a wonderful time of the year. It can be filled with

lights, parties, good food and good friends. It’s also a time that many

people exchange gifts with those they love. In fact it can be so much fun

that in all this revelry one often gets caught up in the moment and forgets

the basic principles of personal finance – specifically, what you buy, you

eventually have to pay for.

The truth of the matter is that such a great number of us go overboard on

Christmas shopping that the economy in general is crippled in the months

after Christmas while everyone scrambles to fix the financial mess they just

got themselves into. There are a few simple things you can do to avoid these

problems this year.

First, set a budget and stick to it. If you think you want to (are able to and

should) spend $1000 on gifts, travel and extra food this Christmas, then set

the budget now. The more specific you can be on the purchases the better

control you will have. For instance, let’s say you have 5 people on your gift

list and you expect to spend $100 each. You also expect to spend $250 more

on food and $250 on holiday travel. List all these out in a notebook, ledger

or spreadsheet. It can be part of your regular budget or a special Christmas

budget. Then track your expenses carefully on each one making sure you

don’t go over your limit.

Shop early for gifts. The earlier you can get started, the less of an impact

gift buying will have on your cash flow. If you spread your gift buying over

several months before Christmas you won’t experience the debts and negative

cash flow that last minute purchasing can cause. You will also make better

decisions and not panic and jump at over-priced merchandise.

Stock up on food bargains now. Christmas baking can eat up a considerable

amount of cash. If you stock up on grocery deals ahead of time you will be

able to save a large amount in the long run.

Lower the expectations. In the past you may have bought for too many

people or you may have been in the habit of buying big luxurious gifts that

you really couldn’t afford anyway. Now is the time to lower expectations for

the coming holiday season. Tell your usual recipients that the gifts will be

smaller, more meaningful, environment friendly, offer help to the poor, etc.

In our family we sometimes give monetary gifts to charity in lieu of gifts to

each other.

Use a waiting period. Forcing yourself to not buy something until you have

thought about it for a few weeks will help to avoid purchases that you may

later regret. If you are in the habit of impulse shopping, try the waiting

period. You may have to start by always shopping with a friend who you have

arranged with in advance to keep you in check.

Teach children to use their own money for gifts. Young children should be

taught to use money wisely from an early age. Help children save through

the year and then help them to use their own money to make gift purchases.

If you always buy gifts for children to give to others, they will never

have respect for the cost of the purchase. If they see their own savings

disappearing, they will quickly realize the less they spend the more they will


Make your gifts. It’s amazing how many really nice gifts you can make

yourself with a little hard work and creativity. Depending on your experience,

the choices are almost endless. You can make crafts, woodworking projects,

plant indoor gardens, design jewelry, sew clothes, make pottery, construct

handmade dolls or puppets, etc., etc. These are just a few things that will

make your Christmas season merrier.


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