Happy Holidays! Christmas bills already waiting to mug you

Helpful hints toward enjoying a debt-free holiday season. Photo: AP

WASHINGTON, October 7, 2013 – Believe it or not, it’s already that time to start thinking about the holiday wallet buster shopping season that is lurking for all of us just this side of the Great Pumpkin.

Right on the heels of summer vacation and back-to-school expenditures, those looming holiday expenses can easily put a crimp in your current budget.

Many will hit the holidays unconsciously engaging in their traditional, ruinous spending customs and habits, only to wind up with a pile of debt on expensive plastic credit cards that will have to be paid off months and years in the future at many times the cost.

The good news is, it doesn’t have to be that way this holiday season. If you take the following advice to heart, there is still time to avoid a terrible financial mess which will enable you and your family to enjoy Christmas and other end-of-year holidays to their fullest. 

And remember: Wise holiday veterans realize it’s not the cost of the gift that you give that is important, but the heartfelt meaning behind it. Perhaps everyone could do without those expensive leather gloves this year, or that clever clay head that grows sprouts of green hair, and instead spend more quality time with family and friends. Holiday activities like this are more meaningful and less expensive.

Time to Consider Grandma’s Layaway

For the more budget challenged shopper this year, it’s back to the future. Layaway, that handy tool of a seemingly bygone era has experienced a revival in recent years and remains a great tool to use.

As an example, for 2013, the current Wal-Mart layaway policy is simple. You just need to start by putting down 10 percent of the purchase price of the items you are buying. You’ll then have until December 13 to finish paying for your items. That gives you about three months from now to pay them off in full without any residual holiday debt. Other stores offer layaway as well.

Let’s look at the reality of the average $800 people spent last year on holiday shopping but using the layaway method instead of plastic. 

In the first place, our Wal-Mart layaway purchase will be finance charge free. Purchases are also backed by Ad Match, the Wal-Mart price matching policy guaranteeing that the retail giant will match competitors’ low prices. The purchase will cost you $800 and you’ll have it paid off in full before Christmas.

That same $800 purchase dropped on a credit card will cost about 16% in average revolving interest on the unpaid balance if the bill is not paid off in full by the first statement date. If you pay just the minimum payments on the credit card balance, without adding further charges in the meantime, your purchase will wind up costing about $1,400 and will take nearly 92 months to pay off.

No contest.

Five Simple Steps to Beat Back Holiday Bill

 Here are five more smart ways to help kick holiday bills to the curb:

  1. To soften potential holiday financial hangovers, Gerri Detweiler, the director of consumer education for Credit.com has some excellent tips to share. “If you are carrying a number of reward points,” she says, “and have not used them, consider cashing them in for gift cards that you can then use to either buy gifts or give as gifts.” 
  2. One grandmother said she loves to receive chore coupon books her grandchildren create. She redeems the coupons throughout the year. The grandkids don’t spend much, and those coupons provide an exceptional benefit, as they shovel grandma’s walk or mow her lawn, not to mention getting quality time with their grandparents through the year. 
  3. Baked goods or potluck meals are another inexpensive way to share holiday cheer with others. For many, there is actually no greater gift than sharing undivided time with a friend or loved one over a good meal. The gift of your time and attention can often be the most precious thing you can give for the holidays. 
  4. People who blow their holiday budgets early and often, winding up with a spending hangover, typically wait until the last minute, and then buy anything, no matter what price, just to have stuff to give. Don’t do that. Get a jump on things now. 
  5. Don’t overspend out of unconscious guilt. Psychotherapist Olivia Mellan, author of “Money Harmony and Overcoming Overspending,” notes, “For the many parents who equate money with love, overspending on their kids (and spouse) for holiday gifts can help soothe guilty consciences for working too many hours away from the family, or being tired and impatient when home from trips and long workdays, etc.  It’s a pseudo-solution, but parents hope it will work. And the culture conspires to support this kind of  often unconscious and short-sighted behavior.” So don’t do it. 

It’s Not Too Late 

If you are sauntering into this holiday season ill prepared right now, don’t kick yourself too much. There is no sense wasting a perfectly good mistake. Just total up what you spend this year and divide it into twelve monthly payments. That’s how much you’ll need to save to glide through the next holiday season debt free.  

Starting in January setup a boring old savings account at your bank (assuming your bank still offers them) and start making your monthly deposits. When the holidays roll around next year you’ll have the cash on hand to pay for them in full. 

Bottom line: Surviving the holiday season without putting yourself deeper in debt is the best gift anyone could ever give you. So give it to yourself.


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Steve Rhode

Steve Rhode is truly one of the most experienced consumer debt experts today. After having lived through very tough financial times himself in the late 1980s he went on to use that painful experience to help others find good solutions for bad debt problems.

He formed a national non-profit organization, lead the debt relief field in the creation of holistic solutions for all types of money troubles, and has written a number of books. Rhode also spent years helping people in the UK, Netherlands, and South Africa with debt problems and has a unique international perspective when it comes to helping people find a happy life after battling debt.

Today Rhode spends a great deal of time helping people find real ways to deal with debilitating student loan debt and he continues to give free advice on all debt topics to all who need help.

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