The Real Magic of The Holidays
7 Practical Tips to Stay Debt-Free While Enjoying the Holidays
By Steven B. Smith
There’s something magical about this time of year when everything is trimmed with tinsel and various shades of red and green. But if you don’t have a spending plan for the holidays, you’ll likely end the year with too little green and deep in the red.
Here are seven smart tips to make sure the magic this year doesn’t result in a disappearing act by the money in your bank account.
- Create a spending plan now. There’s no better gift you can give your family than financial stability. Determine how much you can reasonably afford to spend this year, then determine how much to spend on each individual, not the other way around. Don’t forget to include amounts for decorations, parties, and some of those ‘unexpected’ expenses.
- Make a list and check it twice. It’s amazing how 60% off the original price, limited quantities and 20 other people scrambling madly for a deal suddenly make that electronic nose hair trimmer seem like such a good gift idea. Make a list of gift ideas for each person on your list and try to avoid impulse buys. If you do find a deal too good to pass up, make sure the store has a good return policy in case you come to your senses later. Plus, you can take your budget with you on your iPhone or Android device with free apps from Mvelopes.
- Track your expenses as you go. Waiting until January to get the credit card bill or add up your receipts to see how much you spent is a sure plan for financial disaster. Track your expenses as you go to make sure you know when to pull in the reigns. If the thought of gathering and adding up your receipts every night makes you cringe, try using an online household budget program like Mvelopes.
- Set a deadline for paying off all holiday expenses. If you charge $800 this holiday season, and then make only the minimum payment on that debt, it would take almost 11 years to pay off and end up costing more than twice the original price (assuming a minimum payment of 2.5% or $10 and an annual interest rate of 18%). You don’t want to still be paying for the holidays next August, or worse 2 years from now.
- The best gifts require more thought than money. People really appreciate gifts that show some thought and consideration more than simply a big price tag. But that doesn’t mean you should try knitting a sweater for your mother if you don’t know how to knit and she doesn’t wear sweaters. Stick to your talents and their tastes. Gather up some old photographs and frame them. Give coupons for babysitting, a back massage, or a day free of changing diapers. Refinish that old rocking chair, or record yourself reading a favorite story for a niece or nephew far away.
- Shop online. You’ll save time, gas money and possibly your sanity as you avoid the crowded parking lots and long lines. You can compare prices and find deals online. Many retailers offer free shipping for purchases over a certain dollar amount, or as a holiday promotion. Have the item shipped directly to the recipient to avoid an extra trip to the post office, and extra shipping charges. Make sure you shop early to avoid paying expensive overnight shipping costs. Plus, you can keep track of all your purchases online, and make sure you’re on budget, if you use Mvelopes.
- Give to charity. One of the most common complaints about this time of year is that consumerism has hijacked the season. The remedy? Give to those less fortunate. Giving to charity helps keep needs and wants in perspective during the holiday frenzy. Give gently used clothing and blankets to a local shelter or the Salvation Army, or donate some time wrapping and distributing gifts for Toys for Tots or another organization. It may help you – and your children – discover the real magic of the holiday season.