Cancel The Credit Card Christmas

By: Glen D. Williams
Submitted: 2007-01-17 16:17:36
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...Before Your Credit Cards Get Cancelled! Every year, we respond the same way, like Scrooge, giving away the store to avoid the Ghost of Christmas Future. Unfortunately, if we use credit cards to buy Christmas decorations, refreshments and gifts, most us are haunted by the Ghost of Christmas Past...the past 20 Christmases, if we make the minimum payment. Since we're making payments this year on the holidays of years, even decades past, it makes sense to look at ways we can avoid using credit cards for at least this one holiday every year.

Debt-Elimination vs Consolidation: Especially with the recent low mortgage rates, many use their home equity to consolidate and pay off their credit cards, often with lower monthly payments. Of course, this means last Christmas won't be paid off until 2035 in most cases. The sad fact is, after consolidating to lower their payments, most people go right back to charge those cards up to the maximum they can afford...or beyond. Instead of looking at how to finance another debt consolidation, let's consider the possibility of debt reduction...long-term...elimination. Add up the total of your credit card payments. If you're average, it's about $ 625 per month. One fifth of that ($ 125) is the value of things you bought, with the remaining $ 500 (interest) being the price you paid for not using cash (assuming the minimum payment).

Let's turn that around and use it in our favor, for a change. What if we took every Christmas credit card purchase ( you can do this the rest of the year, too. I just don't want to shock you.) and multiplied the price by 5...the new price representing what we'll pay if we use the credit card. That gives a whole new meaning to the term "Christmas Sale," doesn't it? Think about the financial power you'd have were it not for credit card payments. Most people dream of getting a $ 500 monthly raise in pay, yet they can give that to themselves by simply not using credit cards.

Help For a Debt Free Holiday: Of course, most believe they would need some sort of debt relief to do Christmas for cash and debt freedom is just a pipe dream. This isn't true...it's just a long, hard road to get there. Once you're there, life is far easier without that heavy weight around your neck. I'm just going for a debt free Christmas, though, knowing if I can convince you to do that, you'll see it's worth it to do the rest. That, you can easily achieve in a year, if you're able to say "no" to yourself so you can say a bigger "yes" later. Take whatever you spent last year on Christmas and use it as a benchmark for next year (November is a little late to save for this year). Divide that number by the number of months, or paydays in the year. This is the regular deposit amount for your bank or credit union special savings account (pick one that pays interest). Often, they can automatically deduct the money if your pay is deposited directly. "But, "you say, "What if I can't afford to deposit that amount?" Then, it's even more important for you to do this so you can afford Christmas some day but this brings us to that ugly word...budget.

Merry Money Management: Of course you can afford it...it's just a matter of when you can afford it. Once you get this credit thing cleared up, you can afford five times as much stuff, if you use cash. To be able to have money to manage you must manage the money you have. Budgeting was a four-letter word for me for a long time, until I was forced to do it to save our house. Now, I praise God I had that financial emergency to help me learn the difference between needs and wants. Many a parent will rob their daughter's college fund to give her the dolly she wants this Christmas, though, by March, the doll is likely to be broken or lost. You can get her the doll, but we'd better be able to tell our own wants "no" so we can tell her "yes" to college...and dolls. The problem isn't income...it's outgo. If you don't have enough every month to put in for next Christmas, you could just take your tax refund and put it away. Marsha and I had no new clothes and ate baked potatoes or rice for dinner 2 nights per week for over a year, to get a handle on our budget...you can do this. Maybe go a little lighter on the expenses this year and decide you'll do what it takes next year to make Christmas an all cash event. Trust me! Once you've had the taste of a cash Christmas, you won't be able to stop until you're going cash all the way.

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