The holidays will soon be upon us, and stress levels are already climbing for many people. Each year, many families dream of the perfect Christmas. At the same time, a study by Experian, a credit monitoring company, showed that 60 percent of Americans report that holiday shopping puts a strain on their budget.
Overspending at any time of the year can have long-term effects, but it becomes particularly important at this time of year since we spend more money. Increased debt lowers credit scores, which can cause your cost of credit to go up. Eighteen percent of younger borrowers and 10 percent of consumers overall said holiday shopping has affected their credit scores. Resorting to your credit cards to pay for gifts can add interest charges in addition to the original costs. In addition, if your credit score goes down as a result of your Christmas shopping, you’ll be paying more for presents and everything that goes on that card for as long as two years.
Keeping your costs down during the holidays isn’t always easy. Let’s look at some ways to reduce the costs and, in turn, the cost of interest paid on the charges.
First, take a hard look at your gift-giving habits. Examine your motivation in giving gifts. Do you buy to make people happy or just because it is expected? Forty-one percent of those in the Experian study say they feel obligated to spend more than they can afford. Many of us don’t want to be considered cheap, so we overspend. Look for other options and keep those costs down.
Reduce the number of presents purchased. Go back to that time-honored grade school practice of drawing names. That means the purchase of a handful of gifts, not armloads. Others in your family may be glad to reduce their gift list as well. What about only purchasing gifts for the children this year and leaving adults off the list? Consider giving a family gift. Load a box or basket with snacks and a movie, a special meal, or even cheese, wine and some fancy crackers.
If your gift-giving ideas are coming slowly, have a theme for your gifts. Buy everyone their favorite magazine subscription or purchase books that they’ll enjoy. We have a great bookstore here in Fairbanks that is run by the Literacy Council called Forget-Me-Not Books that has great books at a reduced price. When one of my friends had a birthday recently, I went there and filled a box with lots of books for her reading pleasure.
Think about giving a gift of the heart. Collect family recipes and turn them into a cookbook. Take family pictures, make copies and share them with others. I recently talked to one woman who wrote stories for her grandkids for Christmas. Her grandchildren had no idea what it was like to deal with World War II rationing or what it was like to see her first color television. She gave everyone a notebook with the first installment of stories and adds to it each year. Her children and grandchildren look forward to the latest installment in her book.
Look for cheaper alternatives when gifting. Bake cookies, cakes or breads. I figured the cost of the ingredients for my favorite cookies at $1.20 per dozen. Place them on a thrift store plate and you have a great present for just a few dollars.
The bottom line is to keep your costs down this Christmas. But the other side of the equation is to have enough money to cover expenses without resorting to your credit cards. Save your money ahead of time and only spend what you have saved.
Christmas can be stressful with all the emotions and competing schedules. Don’t fall into the trap of paying too much for presents as well.