Christmas is coming.
Last Christmas I was amazed at the number of people who do not have debt-free Christmases. I guess this couple is ‘normal’ as they celebrated their first debt free Christmas in 10 years. I am a big proponent of thinking and planning ahead. This is self evident in my post about planning today for tomorrow and my post about beginning with the end in mind.
2008 was a stunning reminder of the Biblical truth that the borrower is slave to the lender (Prov. 22:7). There is no better time to decide that 2009 is going to be a debt-free all cash Christmas. Photo by Randy Son of Robert
How can you have a debt-free all cash Christmas?
- Evaluate your motives and beliefs about Christmas. If you habitually overspend during the Christmas holidays I suspect there is a reason. Sometimes we give gifts beyond our means to give a certain impression of our financial status. Sometimes we give extravagant gifts because we fear rejection. Sometimes we give expensive gifts because we are a giver at heart and giving is our love language. Once you have your motives in check you can move along.
- Have an open and honest family (extended also) discussion. Many families speak about their dysfunction when it comes to talking about money. However, it can be an extremely healthy process getting an idea of who people are buying for and approximately how much they are spending. This would alleviate all the awkwardness when Uncle Joe gets Aunt Sally a pen and Aunt Sally gets Joe and all expenses paid vacation to Jamaica.
- Don’t feel embarrassed about suggesting changes. If your family giving practices are over the top or if your family is growing with babies and spouses, suggest an alternative. Perhaps you could try drawing names this year. If someone is disappointed because you can’t afford to give them more, that is their issue, not yours.
- Decide on a budget. Once you have had an open and frank family discussion you are now at the point where you can set a budget. Here is how I would set the budget. Take a guess at what you spent for Christmas last year (let’s assume that is $500). Now take that number and divide it by seven (number of months till Christmas). That would be about $70 per month you would need to save. Decide if $70 a month is a reasonable amount that you feel good about. If yes, then your Christmas budget would be $500. If, however, you cannot scrape together $70, your total will need to decrease. If you have more you can and want to save then by all means save.
- Allocate a budgeted amount to individuals. Take a piece of paper or spreadsheet and write the names of people you might want to get gifts for. Prioritize the list with those you most want to buy for at the top. Put a budgeted number beside each individual. Just be sure your total equals your budgeted total. If you are having trouble making the items match then (a) recheck your motives (2) consider #8 on this list.
- Create a Savings Plan. Now that you have decided to save $70 per month you should get an envelope and write Christmas Money on it. At the start of every month put your $70 into that envelope. Alternatively, if you aren’t comfortable keeping cash at your house or your total will be quite large you can just set up an extra account at your local bank and have them automatically transfer your $70 per month into a separate account.
- Create a Spending Plan. Your spending plan will depend on your savings plan. If you are saving cash then every time you get a Christmas gift you would use cash only from your Christmas envelope. If you are using the bank account, use a debit card for your Christmas account or get the cash any time you shop for presents. After you make a purchase, take the budgeted amount for individuals and subtract what you spent. If you overspent, take something back or decide to spend less on someone else on your list.
- Be Creative. A crazy sickness in our culture is the belief that it requires money to give a gift or to express how important some is. Use alternative gift giving to bring down your budget. Bake cookies, write coupons for your services, make something, or even check out second-hand stores.
Is a debt-free all cash Christmas feasible? It sure is. If you start planning today you have a much greater possibility for success than if you wait till December to start thinking about a Christmas budget.
Here’s a challenge – try a $100 holiday.