Family Debt - Holiday Debt

By Jerry Price - Dec 1, 2005 - comment

Deferred Billing

“What they say: Charge it now, and we won’t bill your account until … (typically it’s six to twelve months down the road). It sounds really good because if they don’t charge your account they can’t charge you interest. In your mind you’re assured of no interest until some time in the by-and-by when, of course, you’ll have so much money you’ll just pay the balance in full. You’ll use their money for that time period instead of using your own (the implication being that your money is sitting in some huge, interest-bearing investment account and you’re taking full advantage of the poor sucker company just like millionaires who make their millions using other people’s money). And if you believe that, you’ve played right into their hands.

“What they know: You will be tempted to place on credit something you couldn’t possibly afford to pay for with cash. What’s more, you’ll purchase the larger model or the more expensive alternative because six or twelve months sounds so long and so far away. And you will be aided in your decision by this little voice telling you this is a wise financial move because you are beating this company at their own game. Ha-ha!

“What will happen: These companies aren’t stupid. They’ve thought this through, tested, tested, and retested. They’re out to make money, folks—not sacrifice their bottom line in order for you and your family to have a wonderful holiday. They know, without a doubt, that you will buy more and go further overboard if they can make you think you’re getting away with something. After all, deferred billing won’t show up on the statement until July or next November, so your spouse will never find out what you charged, and, by then, you can easily slip into denial. It will be so neat, so slick, you won’t have to worry your pretty little head about it until some other day, some other time … hopefully in some other galaxy far, far, away.”

Mary Hunt, Debt-Proof Your Holidays (Nashville: Broadman & Holman Publishers, 1997), 26-27.

Advice for Christmas spending:

  1. Remember it’s in December every year—don’t let it sneak up on you. Start planning in February by putting a little bit aside each month to cover the cost of gifts.
  2. Make a list of everyone you are buying a gift for and put a dollar amount by every name. Total it at the bottom. This is your Christmas budget. The people in the mall have a plan to get your money—get a game plan for your shopping so you can keep some money. There is no excuse for financing Christmas.
  3. Pay cash—put the total from your budget in an envelope and when the cash is gone stop spending. This will help keep you on budget because if you overspend on Aunt Sue, Uncle Harry won’t get a gift.
  4. Sixty-nine percent of Americans bought a gift for themselves last year. DON’T BUY YOURSELF A GIFT! This is the season to give, not to receive…from yourself.

“Tips for Surviving Christmas Financially”. http://www.daveramsey.com/etc/cms/index.cfm?intContentID=3204 (Dave Ramsey) [Accessed August 9, 2005]

Financial advisers suggest that, when it comes time to do holiday shopping, you make a list and check it twice—then devise a spending plan that keeps spending in balance. Carol Burroughs, a financial planner, says, “Most people don’t plan for Christmas. That’s usually how they approach financial planning in general. They just hope things work out.” She developed a PLAN for holiday spending that includes the following:

  • P stands for putting money aside each month for Christmas spending.
  • L stands for making a list of those for whom you plan to buy. It also includes decorations, greeting cards, postage, and entertaining. The list should be limited to what you can realistically spend.
  • A stands for always shopping with cash. Leave credit cards at home so that you won’t be tempted to spend more.
  • N means never waiting until the last minute to shop. After-Thanksgiving sales may be a bargain, but not if you are tempted to spend more because of the good deals.

Chris Anderson, “Where Did It All Go? – Bills Often Linger Past Holiday Season,” http://www.familycredit.org/News/pantagraph.cfm (Family Credit Counseling Service) [Accessed August 10, 2005]

Further Learning

Learn more about: Family, Living, Finances

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