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To Charge, or Not To Charge; That is the Question

For some reason I've become fond of one of Shakespeare's most well remembered lines, so I like to paraphrase it when discussing decision points in our lives. Partly I like it because the phrase implies clear decision points-to be or not to be, yes or no, now or never kind of decisions-without a lot of maybe, perhaps, possibly but possibly not.

It won't be a big surprise to you that Christmas is fast approaching because the merchants have already decorated for the season even though Thanksgiving hasn't arrived yet.

For anyone who's read some of the articles on this website, you'll already know we aren't terribly fond of credit cards. The reason is that, while they can be very good tools when used with discretion, credit cards are the bane of American family finances. They are too easy to use too much because it doesn't seem like you're spending your own money. Well you are, and further more you're spending money you don't have yet.

So, we're about to have a confluence of two powerful-impulses, one might term them. The impulse to buy a lot of expensive gifts for friends and relatives, along with the impulse to ignore reality (and price) and charge them all to credit cards.

Now the above combination doesn't have to portend economic disaster if we limit charges to those we know we can pay in full at the end of the month. However, for far too many Americans this guide isn't put into practice at Christmas time. All too often the result is a level of Christmas credit card debt that takes six months or longer to pay off.

Just because this scenario happens a lot doesn't mean it has to happen to you. If you take command of your money, it won't. Toward that end, here are some things for you to think about that will help.

• The Christmas season is about love, and family; closeness and caring. It is NOT about expensive gifts. So, think in terms of conveying love and how you might do that. Think in terms of giving more modest gifts of things the people in your life need and can actually use. When I was a boy, I NEVER ONCE got whatever it was I wanted so badly at the time. But I did get a new winter coat, new boots to replace the one's I'd out grown, books and pencils and implements for school.
• Plan for Christmas ahead of time by purchasing gifts through the year (and then stashing them someplace where your children can't find them) thereby spreading the cost of giving over twelve months rather than one. Your gift buying will be on a cash basis rather than a credit basis which means no interest charges and no problem with worrying about when the bill will finally be paid.
• Plan ahead for next Christmas NOW by starting a small saving account into which you will put a small amount each month. A year from now you will have the money ready and waiting without needing to go into debt for Christmas giving.

Debt should be reserved for purchases that will eventually add to your net worth rather than things that will disappear. For gift giving, force yourself to move to a cash basis. What you'll find is that you'll not get as cranky when you're paying your bills for the six months following the otherwise very beautiful, joyous, and warm Christmas season.

arley