Monday, July 30, 2012

Christmas in July

I know the last thing you are thinking about this July is Christmas.  Why would you, it's 5 months away, right?  Christmas is the time of year when we tend to drastically go over our income.  The average American spends 40% more than what they earn during the holiday's.  The excuse we give ourselves to cope with the spending is, "Hey, its Christmas....I only do this once a year.", or "I want to show how much I love them."  So we spend our whole paychecks on gifts and when that is not enough we turn to the all mighty credit card to save the day. 
Here are some holiday statistics brought to you by
  • Americans spend $525 billion over the holiday season.
  • The average American spends a little under $1,200 during the holidays which includes gifts, food, and travel.
  • 23% of the $1,200 spent is paid through credit cards.
  • 1 out of 3 bankruptcies filed in March sited overspending on Christmas.
Is this what Christmas is really about?  Spoiling our kids with gifts we can't afford.  Are they even playing with the gifts that we bought them on Christmas today?  Do we really need to be competing with others to see who receives the best presents and buys the most expensive gifts?

Instead lets give gifts this Christmas that will touch people's hearts rather than damaging our wallets.  Find out what they really need in their life instead of what they want.  I rather my girlfriend give me boxers, socks, and wife-beaters for Christmas (I really need those) instead of going broke buying me that 50" 3-D flat screen TV that I want.  In this case I would be happy, she would be happy that I'm happy, and of course her wallet might even be happier.

But if you are the type that has to buy a lot of presents here are some tips:
  • Start Saving Money Today- People tend to spend the money that they make during November and December for the holidays.  Try to put money away now so when December comes you do not have to use all of your current monthly income on presents.  If you can save $50 a month for Christmas that is $250 you are starting with on your holiday budget.
  • Make a List- Make a list of the people you plan to give gifts to and also what type of gift you are planning to give them.  Start to research the price of the gift and then add up the cost of all the gifts together.  Maybe you can find something cheaper now then if you wait to buy it during the holiday's.
  • Secret Santa- Sometimes it could be a hassle to give all your co-workers or all your aunts, uncles, and cousins a gift.  Why not start a secret Santa?  This is when members of a group secretly give a present to a person that they are randomly assigned to.  You can set a price limit on how much you can spend on the gift.  In the end everyone will not feel left out if you do not give them a gift.
  • DO NOT USE YOUR CREDIT CARD!!!- This is the last but most important tip that I can give you.  The bottom line is you can not afford the gift you want to buy if you are thinking about using the credit card.  People usually spend 112% more when using their credit card than what they would if paid in cash.  How is this possible?  Buying that $500 Ipad on your credit card might make you feel happy in the short term but with the average credit card interest rate at about 15%, you have just added close to an extra $100 to your purchase.  So stay away from the credit cards during the holidays, no purchase is worth it. 


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