Christmas will be in December!
That’s not news to anyone, but we act as though we don’t know when Christmas will arrive because the Christmas season often catches us unprepared financially. This year it’s especially important to plan ahead for Christmas because so many people are still recovering from the financial impacts of the pandemic.
And even if you survived the pandemic with no financial harm, what about your family and friends who are still trying to recover after losing their jobs, getting laid off, or having their small business close down.
We encourage you to avoid going into debt this Christmas. Now is the right time to start planning so you can achieve that goal. We hope you will encourage others to do the same.
Many people don’t budget or plan for holiday spending throughout the year. The result is that Americans will whip out the plastic for Christmas spending and use credit to finance Christmas costs. In 2019, the average Christmas shopper spent about $1,000. If the shopper spent $1,054, and paid a minimum payment of $25 each month, he or she would be paying down the balance from Christmas 2020 till 2025. That’s FIVE YEARS to pay off one year of Christmas costs!
With an average interest rate of 15.9%, fees on that debt could add up to $500. And that doesn’t even take into consideration the debt added to the credit card balance for Christmas in 2021, 2022, 2023 or 2024. It’s easy to understand why the number one fear of people during Christmas is debt.
And we do it to ourselves! There is no law requiring us to overspend at Christmas. It is a choice we make.
That’s not what Christmas is all about. That’s why we’re talking about Christmas here in summer… because we NEED to think about it now.
We are 6 months into the year and it’s not too late to start saving to avoid Christmas debt. You still have 5 months to build a Christmas nest egg. You may be thinking that you can’t possibly save 1/5 of your Christmas costs over the next 5 months. So my question to you is: How can you possibly afford to pay for those all those Christmas costs plus interest in the months following Christmas?
Now is the time to establish a budget for how much you’re going spend for Christmas and start putting money aside. Do you want to put your family’s financial future at risk by spending money buying gifts people don’t want or need, or do you have higher priorities?
If you want to make this a debt free Christmas, set a budget by figuring out how much you spent last year for Christmas. Be sure to include all costs, including travel, parties, special meals, gifts, decorations, clothes, cards, decorations, etc. Everything you spent on Christmas 2019 should be included. When you look at what you spent for the last Christmas, determine what needs to stay on the list and what needs to be eliminated from the list.
Divide that total by the number of paydays till Christmas and you’ll know how much you have to save each paycheck to have a debt free Christmas.
Let’s be realistic. Many of the gifts given are not used by the recipient. They are tossed aside. They are returned for something else. They are donated to a non-profit organization. In short people are spending money giving useless gifts. So why spend money on something a person won’t use?
We have a group of very close friends. These are people we can call in the middle of the night and they would be at our doorstep in minutes with absolutely no questions asked. I am happy to say that none of us buy each other Christmas gifts. We just never started that practice for the almost 30 years we have known some of these people. The aspect of using gifts in some way to prove our friendship is meaningless to all of us.
My husband and I do not exchange gifts with each other, and that makes us sound like scrooges. The reason we don’t buy gifts for each other are very practical and have nothing to do with how much we love each other or how strong our marriage is. It is much more important for us to travel and have experiences instead of buying more stuff.
We already have enough stuff. There may be things we would like to have, but there is nothing we really need. So why should we rack our brains trying to come up with a unique gift idea that neither of us wants?
While birthdays and holidays are a reason to celebrate, we would much rather celebrate by inviting friends over for a nice dinner instead of spending hundreds of dollars on gifts. At the end of the day, we have a strong marriage and a good relationship and we don’t need a holiday to remind of us of how important we are to one another.
The final reason we don’t buy each other gifts is because we have a limited amount of money and gifts simply are not at the top of the priority list. Our higher priorities are giving to causes we care about; personal travel; vacations with the extended family and a secure future. The more we avoid spending on non-essentials, the more cash we have left to fund the goals that are most important to us.
What is really important at Christmas is the gift of God made man, not all of the toys and clothes and electronics we buy for each other. It’s important to have special times with the family.
As a family, focus on the real reason for the season—to celebrate the birth of our savior. Make a commitment to focus on the spiritual side of Christmas. Now is the time to discuss how you can do that, otherwise you are into the holiday season and it is too hard to change what you’ve always been doing. The important thing is to prayerfully make the commitment not to go one penny in debt this Christmas.
The only gift anyone really needs at Christmas is the Baby Jesus.
Tune into our podcast to hear more about keeping Christmas spending sane.