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Consider your Christmas shopping list. What was the most expensive single item on it? That special gift for your partner? The latest electronic gizmo for your teenager? Your family’s holiday travel? Certainly, with inflation hitting a 40-year high, all these items cost significantly more than last year. However, even considering inflation, for some Christmas shoppers the most expensive holiday purchase this year could be interest.
At this time of year it’s easy to hit the stores or online retailers, plastic in hand, and end up spending more than you had planned. The crowded stores, the barrage of enticing online offers stacked up in your inbox, the sense of urgency to find the right thing for everyone on the list, and the tempting arrays of “bargain gifts” can seduce us into impulsively buying stuff we had no intention of getting.
A Tushy Travel Bidet? Just the thing for the traveler that has everything. How about the inexpensive Men’s Christmas Tree Print Suit? Got one for Uncle Ed. The gift-boxed tiny bottle of expensive advanced anti-aging stem-cell facial serum? It was perfect for Grandma. Check off the names until everyone is accounted for and the presents delivered and, at last, you can now breathe a sigh of relief.
That sense of relief can come to an abrupt and painful end in January when the credit card bills show up. All those purchases that were “just a bit more than I planned to spend” can add up to a bill that can take months to pay off. Which means you’ll pay hefty interest charges on top of the purchase price of the gifts. That facial serum you got on Black Friday could end up costing 25 percent more than its sale price of $236—not such a bargain after all, especially if Grandma never uses it and regifts it to your niece.
Perhaps a great New Year’s Resolution would be to cross “Interest” off your Christmas list for good. The following steps can help.
- As you pay off your holiday credit card bills, keep careful track of the interest you pay. Make a list; check it twice. Seriously pay attention to how much that interest adds to the cost of your purchases.
- Notice what you do to pay off the bills. What other items in the budget do you reduce, delay, or go without to make room for the credit card payments?
- If you can manage to pay off the bills after Christmas, you could also manage to save the same amount of money before Christmas. If you can make a $50, $75, or $200 credit card payment for several months after the holidays, why not commit to saving that same amount before the holidays? Once you have the credit card account paid off, keep paying that same amount into a savings account every month. Then, by next year’s holiday season, you’ll have a gift-buying fund to draw from. Instead of adding to the cost of your gifts by paying interest, you’ll increase your buying power by earning interest.
- Consider the time-honored strategy of shopping with checks or cold, hard cash instead of plastic; it can help you spend less. Or set a total Christmas gift budget and, before you pay with a credit card, subtract the cost of each item as you shop. Those extra impulse bargain buys will probably be a lot less tempting.
True, Uncle Ed might need to do without the Christmas Tree Print Suit. Try taking him out to lunch in January instead and enjoy connecting over a nice meal. With no credit card bills to pay off, you’ll be able to afford it