The Real Magic of The Holiday Season
9 Practical Tips to Stay Debt-Free This Year

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 nine smart tips to make sure the magic this year doesn’t result in a disappearing act by your bank account.

1. 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. 

2. Track your expenses to stick with your plan.  If you wait until you get your credit card bill in January to see how you did with your plan, you’re almost sure to overspend.  Track your expenses using an online spending management program like Mvelopes Personal, or a paper-based envelope system or spreadsheet, to keep an up-to-date view of your spending.  Compare your actual spending to your plan often to make sure you stay within the limits you’ve set.

3. 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%).  Mvelopes Personal ( www.mvelopes.com) has a credit card feature designed to help set aside the money to cover purchases made with a credit card so you can pay the bill in full each month.  You don’t want to still be paying for the holidays next August.

4. Trim the list along with the tree.  In addition to trimming the tree this year, trim your gift list.  Instead of sending knick-knacks to everyone you know, send a thoughtful note expressing your appreciation for their friendship.  Spend the money you save instead to buy gifts for your closest friends and family or contribute it to your child’s college savings fund.

5. Send an e-card instead.  You’ll save on postage and stationery, and many e-cards include animation and music and even interactive games, making them more fun than their paper counterparts.  You can include a personalized message, and won’t have to worry about it getting there on time.  Try hallmark.com or 123greatings.com for fun, free e-cards.

6. Get creative with your gifts.  The best gifts require more thought than money.  Gather up some old photographs and frame them.  Create a digital photo calendar.  Give coupons for babysitting, a back massage, or a day free of changing diapers.  Refinish that old rocking chair.  Make a warm batch of your famous chocolate chip cookies, or record yourself reading a favorite story for a niece or nephew far away.  People will appreciate the personal touch and thoughtfulness of the gift.

7. Shop online.  You’ll save time, gas money and possibly your sanity as you avoid the crowded parking lots and long lines.  Many retailers offer free shipping for purchases over a certain dollar amount.  Have the item shipped directly to the recipient to avoid an extra trip to the post office.  Make sure you shop early to avoid paying expensive overnight shipping costs.

8. Step back to clear your head.  It’s easy to get lost in the hustle and bustle of the busiest time of the year.  Schedule some time to go ice-skating, see the lights, take a warm bath or enjoy a good book and a cup of hot chocolate in front of the fire.  Taking a step back can help you clear your head to avoid getting caught up in a frantic spending frenzy.

9. 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 your children – and you – discover the real magic of the holiday season. 

Steven B. Smith is president and CEO of In2M Corporation and author of Money for Life: Budgeting Success and Financial Fitness in Just 12 Weeks!  www.mvelopes.com

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