I was flipping through TV channels last night and happened to catch a scene from “How the Grinch Stole Christmas” with Jim Carrey. The scene opens on a store packed with Whos buying gifts like it’s going out of style. All of the sudden sirens and bells begin dinging and the clerk behind the counter congratulates the lucky Who for maxing out yet another credit card. The crowd erupts in cheers with many handshakes and congratulatory pats on the back.
While I’d like to shrug this off as a silly and exaggerated Christmas flick, it’s not that far off from where most Americans are today. The average American is expected to spend nearly $750 on Christmas this year, up 4% from last year. With our economy moving at the speed of molasses and the unemployment rate still hovering around 8%, most of us are hard-pressed to find an extra $750 lying around. So where do we get the money to afford our Christmas lists? Debt. Debt and more debt. As of July, the Federal Reserve reports that the average household is carrying $54,000 in debt. Nearly $16,000 of that is credit card debt. It’s time to stop the insanity!
Now don’t get me wrong, I love Christmas. I mean, I really, really LOVE Christmas. I love buying gifts and decorating my house and donating to charity and splurging on grande peppermint mocha’s. However, the fact that it is Christmas does not give any of us the liberty to spend beyond our means. I love Dave Ramsey’s saying “Act your wage, even at Christmas.” We have to find a way to celebrate the holidays and embrace the joy of the season without spending ourselves into poverty. Here are 5 ways to avoid a Christmas debt hangover:
1. Decide on a budget (with your spouse!) before buying a single gift. Write down every person you have to buy gifts for and make sure to budget for things like Christmas cards, holiday groceries and decorations.
2. Go shopping with cash. Once your cash runs out, your shopping is done. Force yourself to stick to your budget.
3. Don’t go overboard. By this time next year most of us won’t even remember what we got for Christmas this year. A few extra gifts is not worth having a debt hangover.
4. Remember that Christmas is not an emergency. (Another one of my favorite Dave Ramsey-isms) Don’t let yourself fall for the Christmas fantasy trap. You don’t need all the “stuff” to have a merry and festive Christmas with family and friends.
5. And finally, save for Christmas all year long. It might be too late to save for this Christmas, but it’s never too early to start saving for next year! We all know Christmas comes every year; we all know that we will buy gifts every year, so why not save all year? Put away some of your bonus check, or maybe your tax refund or throw $50 a month into a coffee can. Just start somewhere. Having a Christmas cash cushion can make a huge difference not only on your finances, but your stress level as well.
I wish each of you a very merry and debt-free Christmas!
Berk, Christina (October, 2012). Holiday Shoppers to Splurge on Themselves This Year. Retrieved 12/6/12 from www.cnbc.com/id/49441443
Federal Reserve (July, 2012). Credit Card Debt Statistics. Retrieved 12/6/12 from www.statisticbrain.com/credit-card-debt-statistics.
Serenity Melnick is a Registered Representative offering securities through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Legacy Wealth Management, LLC and Cambridge are not affiliated. Cambridge does not offer tax advice.
Copyright ©2012 Serenity Melnick. All Rights reserved. Commercial copying, duplication or reproduction is prohibited.
