The Holiday Season and Spending
“The Santa Tax” = the price you pay for unplanned and overly generous gift-giving
It’s the most wonderful time of the year. Or is it? All too often, it’s also the most expensive time of the year. Aside from the festive gatherings, most of us feel immense pressure to spend on gifts for friends, family and the inevitable workplace secret Santa’s that arise this time of year.
But if you fail to plan for your holiday shopping, you may find yourself up to your eyeballs in credit card bills in January, paying high interest rates that follow you well into the new year and beyond.
However, you shouldn’t have to bury yourself in debt to have a fun and enjoyable holiday season. Instead, consider these ideas to help manage your holiday spending.
Start a Holiday Fund at the Beginning of the Year
If you refer back to my last post, you’ll get step-by-step instructions on how to create a budget. Once you’ve completed your budget, set aside a specific amount of your disposable income each month, beginning in January, and voila! You’ll have cash on hand to cover your holiday shopping, thus avoiding the added expense of credit card interest. While you still have to be conscientious about how much you spend, at least you won’t be paying for granny’s fuzzy slippers until next November!
Have a Holiday Budget
No matter how many people you feel the need to shop for, you must start with a budget: the maximum amount that you’ll spend on all of your gifts for the season. If you start shopping without a plan, you’re sure to overspend and regret it come January. I am guilty of this myself, sometimes. I’ll rush to get my shopping done right after Thanksgiving, only to later realize that I forgot to add several people to my list; except by now, I’ve already spent my budget.
To avoid this dilemma, start by making a list of all the people you want to shop for, and revisit the list several times before you begin shopping.
Once you’ve got your list, assign a portion of your budget to each person on the list. Of course, how you apportion your budget is up to you, but the most important people on the list should take priority. If you’re having trouble staying within your budget, consider alternatives, such as those discussed below.
Particularly if you are planning on giving a high ticket item as a gift, such as electronics or jewelry, take the time to shop around and be sure to find the best price. Compare not only retailers, but brands as well.
Contrary to popular belief, black Friday is not always the best time to get deals. As the holiday season nears to an end (closer to Christmas and New Years) the retailers are getting ready to close their books and need to make way for new stock, so they will be more likely to cut prices or offer discounts. Even though last minute shopping can be stressful, you may do better on prices.
Give Gifts That Only Take Up Your Time (and Not Your Money)
Let’s face it, you may have more people to shop for than you can afford. If you run into this problem, consider a gift that is free, but thoughtful. If you’re shopping for newly minted parents, for example, consider gifting them an evening of your time as a babysitter. Perhaps the new graduate in your life just landed a new job that is very demanding of their time; they will be sure to appreciate your offer to clean their home or car, as these things often get neglected by busy, young professionals.
Even though it won’t cost you a penny, these services will be greatly appreciated, and perhaps more so than an expensive item from the mall.
Knit a scarf, bake some cookies or make something creative with things you already have at home, or can buy cheaply. It really is the thought that counts!
Be Honest with those Closest to You
If you’re unable to make any budget work, just be honest. Your friends and family are likely to be more supportive and understanding than you might think. Tell them that you just don’t have the budget for holiday shopping this year and instead offer to help with preparing the family’s holiday meal, or putting up the decorations.
People should never make you feel as though you have to spend money in order to be worthy of their love and affection. However, if giving no gift at all makes you too uncomfortable, suggest the family participate in a secret Santa so that you’re only tasked with purchasing one gift, instead of many. They might be happy to be relieved of all the shopping and spending as well!
When All Else Fails
February through April tends to be my busiest season. I often file more bankruptcies in these few months than I do the rest of the year, combined. I think it’s because many people are already in financial distress before the holidays, and then push themselves over the edge with their holiday shopping. Most people also receive their tax refunds this time of year and therefore have a sum of cash ready to cover the cost of filing fees and legal services.
If you go a little overboard with your gift giving and find yourself in distress when those credit card statements inevitably show up in January, consider bankruptcy as one option. At the end of the day, even if you were frivolous with your holiday shopping, you don’t have to choose between paying the rent and paying MasterCard. The law can provide immediate relief and a fresh start, even when you overspent to avoid being a scrooge.
Benefits of Bankruptcy
- Eligible filers eliminate 100% of credit card debt in as little as 4 months
- Relief begins immediately upon filing (end harassing collection calls and protect yourself from lawsuits, wage garnishments and repossession)
- start rebuilding credit immediately after filing
- Pre-filing payment plans are readily available
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