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Avoid Debt and Have a Stress Free Christmas

By Ian Martin

Experts are predicting that Canadians are going to spend less this Christmas. That?s not surprising, since Canadian households are carrying more debt than ever before. The unemployment rate improved a bit this year, but it remains high, particularly if you are one of the many residents of Ontario who are unemployed, or under-employed. The bottom line is that we are all feeling financial pressure.

For those of you who are still struggling with what to get for that someone special, I want to provide some words of advice. Here are my five tips for enjoying a happy and debt free Christmas:

1: Commit to Spending Less

Sounds simple, right? Consider prior years. How many times have you told yourself that next year was going to be different? Making a change takes a focused, determined effort.

If you are like most people, you will be tempted to overspend. Understanding that is a very important first step in keeping things under control.

2: Make a Budget, and then Make Your List

Before you head to the mall, decide how much in total you want to spend this holiday season. Some people might say to start with a list of people you want to buy presents for. That is an important step, but should not come first. Money is a scarce resource for a lot of people these days. The amount of money you have available should be the starting point for your spending decisions, so start by making a Christmas budget.

Once the overall budget is set, the shopping list is critical. Spend time with your spouse to brainstorm for ideas. Check prices online to confirm that the budget works. Once the planning is done, this shopping list is no different than going to the grocery store.

Presents are obviously a big part of holiday spending, but it is not the whole story. When considering your budget, don?t forget some of the other expenses that go along with the holidays. You need something to wrap those affordable presents in. If you are travelling to spend time with friends and family, there will be expenses for gas, hotels, eating out, plane tickets, etc. If you are going to be the host or hostess, you will have expenses for food and decorations.

Bonus Tip: Don?t forget to communicate. If you make the budget together with your spouse, you are more likely to hold each other accountable for variations from the plan. The whole point about a plan is to eliminate surprises.

3: Avoid Credit Cards

No discussion about money and holiday spending would be complete without mention of credit cards. Credit cards can be very useful for making purchases when you are a little short of cash. They are also very useful for making online purchases and booking flights, hotels, car reservations, etc.

The key is having a plan for paying off credit card purchases. If you pay your credit card balance in full each month, there are no interest charges. The trouble, of course, is when you carry a balance from month to month and start to incur interest charges. That?s when your credit cards become a burden. No-one wants to pay for Christmas purchases for an entire year, with interest.

So, leave the credit cards at home, and pay cash, or use your debit card. If you must use credit cards, pay the balance off in full each month.

4: Make a Deal

Continuing the theme of alleviating Christmas induced financial stress, I want to explore the fine art of bargain hunting, or the Art of the Christmas Deal. Here is my advice:

Compare Prices

For those who still read the newspaper, you have probably noticed a deluge of inserts from all manner of stores over the past few weeks. It makes it easy to browse for gift ideas and compare prices.

If you are a member of the 21st century, an easier way is to do some research online. With a little hard work and patience, now is a great time of year to find deals.

Shop Online

If you?re already comparing prices online, why not go ahead and take care of the shopping too? If you?re driving all around town to different stores, you risk throwing away those savings through transportation costs.

Many people are concerned about using credit cards online for fear of identity theft. One way to limit that risk is to have one card that is dedicated for online purchases with a modest credit limit.

Ask for Price Matching

Here?s another way to avoid spending all of your time in the car. Ask for price matching. A lot of stores these days will match or beat a competitor?s advertised price.

It?s Not All About You

Deals are out there. You will probably be tempted to spend money on yourself. The people who want your money will tell you that you deserve it. That?s a marketing ploy. Ask yourself if it is part of your plan.

5: Remember the Christmas Spirit.

This is not a religious message. It is about remembering to be kind and generous toward the people around us. It is about remembering the importance of the bonds we have with our family and friends. That’s the true Christmas Spirit.

So much of the stress we feel at this time of year comes from the pressure of trying to please others. That?s because we want our loved ones to be happy. It?s easy to fall into the trap of spending money in an attempt to find that happiness and strengthen those bonds.

Regardless of your financial situation, my advice is to be weary of that trap. Look for fun ways to enjoy the holidays. Snow willing, a day of tobogganing can?t help but bring out your inner child. Another idea is to go skating with your children or grandchildren. My point is that there are numerous possibilities for bringing people together without spending a lot of money.

Full post as published by Hoyes Michalos and Associates Ontario Personal Bankruptcy Blog on December 13, 2010 (boomark / email).