3 Ideas to Avoid New Credit Card Balances for the Holidays

I’d guess “Christmas” is the second-most mentioned Rainy Day category in any discussion about the You Need A Budget (YNAB) philosophy of money management.

I’m afraid many families start the new year with a serious holiday hangover in the form of fresh credit card balances. Nothing quite like the horror of 15% to 25% interest to knock your holiday cheer down several notches.

With 13 days until Christmas, many of you have already finished your shopping. Others of us will be hitting it hard this weekend.

I wanted to pass along a few thoughts about how to minimize (eliminate?) new credit card debt from your holiday gift giving.

I’m treading lightly here, acknowledging the high emotions around gift giving and money. These are my own thoughts and feelings, not given as right or wrong – just shared to start a discussion.

1. Detach the dollar amount from the value of the gift.

Two Christmases ago I spent close to $1,000 on my wife’s Christmas gifts. Yes, it was a fun morning. But when we talk about gift ideas for her birthday/Christmas/anniversary, she always reminds me her favorite gifts have been the few handwritten letters I’ve given her over the years (pardon the personal mushiness).

Given our current struggle to free ourselves from debt, I bet my wife would have much preferred a letter to the stuff I got her that Christmas.

(Kate also tells me one of her best Christmas memories is of her dad making toys from wood to give to her brothers.)

2. Consider returning a few things.

If you’re finished (or close to finished) with your shopping, and you know you won’t be able to cover the full credit card balances when they’re due, consider taking some stuff back.

Sorry to be the ultimate scrooge, but I’ve never given my children a gift (for any occasion) that was so useful or exciting that it was worth carrying on a credit card at 25% interest.

If you’ve managed to follow my first bit of advice (detaching the dollar figure from the value of the gift), I’m sure you can find ways to give that more than make up for the “loss” of any item you return.

3. Do your own thing; don’t worry about how much your family or friends are spending.

My parents weren’t big spenders (thank goodness), so I’d usually go back to school after the holiday break and hear lists of gifts received that were much longer and more expensive than mine. Yes, I did feel envy. I’m sure I also wished my parents were “richer” – which in my friends’ parents’ cases likely meant “more willing to carry Christmas debt.”

But as an adult I’m grateful my parents didn’t make life about stuff. I didn’t follow many of their good financial examples, but they seem to have permanently inoculated me (and my siblings, now that I think about it) against addiction to stuff. I hope to pass the same along to my own kids.

There’s no shame or judgment here – just me encouraging you to take a step back, slow down a little, and think hard about the value of the gifts you give.

What are you doing to keep your holiday spending at comfortable levels?