Dont Charge the Holidays

by : Martin Lukac

When it comes to the holidays, so many people start getting out their credit cards. After all, it is just once a year, for the ones you love and you'll pay it back in a couple of months. So we are generous.

Without realizing that we will pay on those gifts for the next year or more. They will cost up to 20% more than what we purchased them for, due to interest.

Most people do this every year. It has become a holiday tradition for many consumers. However, buying holiday gifts, dinners and travel isn't a good use of your credit. You are increasing your debt and reducing your monthly budget. While it may seem great right now, later it will start to pile up on you.

Most financial advisors will recommend that you save small amounts of money throughout the year in a special holiday savings account. All you have to do is know how much you plan to spend and then divide it by 12. Deposit the resulting amount in the account each month. That is your holiday spending.

Or if you find it difficult to put this money into savings, have it put there for you by your bank. Many banks and credit unions have Christmas clubs that allow you to put so much a month into a savings account. They will often automatically deduct it for you.

I recommend a unique approach to many people. Have a year-long shopping session. Yes, you will still need to save for your food and travel, but the gifts will be taken care of. Simply dedicate each month to finding certain people's gifts. For example, in January, I purchase my mother's gift. In February, I look for my sister's gift. This allows me to take advantages of sales and other bargains. If something is on sale that fits my sister better than my mom, I might swap their months. The idea is that I spread my shopping out over 12 months. I love to shop and am not great at saving, so this works perfectly.

The holidays are truly a season of giving. But don't give away your future. By charging up your credit cards, you are spending next year's savings. Your budget will be stretched even more. Look to the consequences instead of just the benefits of spending a lot of money on your holidays. Be creative and give from the heart instead.

There are many frugal holiday gift ideas out there. You can make things for those you love. Many families draw names, limiting the amount they have to spend. Others don't allow themselves to give gifts that they have purchased. They have to pass on or make something. These are nice traditions. They take the focus off of the shopping and put it back on the thought that goes into the present.

When it comes to children, there are many ways to save money. Stock up on toys all year long, especially when they are on sale. Shop the discount and dollar stores. They often carry great small gifts that children adore. The gifts don't have to be high dollar for a child to love them.

Put away that credit card and spend differently this holiday season. You'll thank yourself later.