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Friday, September 26, 2008

Stress-Free Christmas Part 2

Christmas countdown banner

As I started thinking about what causes stress during the Christmas season, I put money for gifts at the top of the list. My husband and I are committed to not incurring new debt (and paying off two more debts - one credit card and one student loan - that are left from our "stupid debt days"), so the money doesn't stress us quite as much now. We started shopping credit-free two Christmas seasons ago, and we are SO glad that we did!

There's nothing worse than having to pay for Christmas gifts throughout the following year. And what if you don't get the credit card bills paid off by the time the next Christmas comes around? That probably means using the cards again that year. Since you're having to make credit card payments, you don't have the extra cash to pay for the current year's Christmas gifts. It can become a never-ending cycle. So how do you break it?

First, you make a decision that you WILL NOT use the credit cards. We're extreme enough that we don't even use them for online purchases. If it's a major retailer's site that we know (Amazon, JCPenney, etc.), then we'll use our debit card. (Check with your bank. Most back Visa debit cards with the same guarantee as credit cards. You just have to use them as credit cards, not debit cards.) But what if it's a company we've never dealt with before?

We just discovered this nifty PayPal plug-in software that you can install on your computer. You set up a PayPal account (or use an existing one). Then you install the software on your computer. When you get to an online shopping cart, you can have the software create a one-time use credit card number for you. It's not YOUR card number, but it's linked to your PayPal account. It can only be used one time, for the purchase you're making. That means, that no one can steal the number and use it fraudulently. If they try, it just won't work.

The beauty of the PayPal software is that it's NOT a credit card. It's acts like one when you buy online, but the money comes directly out of your PayPal account. Your PayPal account is linked to your bank account, so the money comes out of your bank account immediately. It's like paying cash, but it's very safe.

Going credit-free for Christmas means that you may have to cut back on your gift-giving the first year. That's how you break the cycle of credit card use. We have a HUGE family that we buy for! We got pretty creative when we started going credit-free. For our parents and grandparents, we used pictures of our daughter to make enlargements. Have them printed at Wal-Mart, buy some inexpensive frames, and you have a great gift! You can even update the picture each year for Christmas or maybe even a birthday, Mother's Day, or Father's Day.

We also sat down and created a.... UH-OH it's the dreaded "B" word...... budget for gift-giving. It sounds very un-Christmasy, but it works! First, we made a list of everyone we buy gifts for. Then we put a dollar amount beside each person's name. We tried to remember what we had spent the year before and made our best ballpark estimate. When we added it up, we were shocked. We couldn't believe how much we'd spent! We didn't even realize it, because we had been using our credit cards. So, planning ahead was very eye-opening.

The next thing we did was re-evaluate how much we were spending. We downsized the dollar amount for every single person on the list. We lessened some more than others, keeping our parents and brothers proportionately a little higher than other family members. We even cut back on how much we spent on each other. We set a limit for each person (including ourselves) and stuck to it. If we happened to find a to-die-for gift that was slightly over budget, we talked it through and figured out what we could change to compensate for it.

For those of you who are bargain shoppers, use your skills to snag some great gifts. If you're a CVS/Wags/Rite Aid shopper, see what kinds of goodies you can find for free or almost free. If you scan the ads with an eye for gift-giving, you'll be surprised at what you can find. Or maybe you can stockpile a few ECBs from CVS and use them to buy non-ECB-earning items that would make good gifts. Think about your shopping a little differently, and you might surprise yourself with what you can find.

We also try to earn extra money prior to Christmas. We're paying off debt now and saving for a vehicle, so saving for Christmas is tough. Maybe you have some extra cash and can save some money for gifts. But we found it's better for us to earn the extra that we need for Christmas. Since we have a budget, we know how much we need to earn. I have a stationery and invitations business, and we make personalized Christmas cards. They're a big hit at Christmastime, and selling them on sites like eBay helps to pay for our gift-giving. Maybe there's something you can do for a month or two to earn some Christmas cash.

The key is making a plan and figuring out how to carry out the plan. Being intentional with your gift spending will make your Christmas much less stressful!