12 THINGS AT CHRISTMAS THAT CAN ADD DEBT TO ME – 3. Using Credit Cards For Gift Loans

It can feel great to get that treasured item on your loved one’s list that they have always wanted. Even if you can’t pay for in full, your credit card allows you to get it now. Just put it on a credit card. That way you can make payments and it’ll be MUCH more affordable, right? Wrong.

Debt creeps up on you like snow piling up during a snow storm. You don’t notice how quickly it’s piling up because you’re not really paying attention. Then the slow-moving avalanche of credit card debt can bury when you are blinded by the emotion of getting what you want now. And once you start leaving a balance forward on your credit card it is soooo easy to just keep adding to that balance because the payment is so low AND you have more credit available!  So why not get that gift now and have what you want, and then pay it off a little at a time?

Well, unfortunately, the card does have a limit, and once that card’s limit has been reached, you still need to pay on it every month, for a very long time. No problem, just open up a new card account and use that one, until that one is maxed out. And so on, and so on, and so on.

Before you know it, your credit runs out, and you’re up to your eyeballs in debt, paying minimum payments for on things you don’t even have anymore! You could be in debt for years, maybe even decades paying high rates of interest on that special Christmas gift you HAD to get, leaving you no money left over for the things you really need.

Don’t get blinded by the snow storm.  Spend responsibly, if you can’t pay for it now, don’t buy it. Put the money you would have spent on interest into investments. That way you’ll have the money to get what you want in the future.

12 Things At Christmas That Can Add Debt To Me – 2. Buying gifts at 0% interest

These offers can be soooo enticing. Especially when you see that big screen TV or a really comfy recliner that your significant other has ALWAYS wanted and that sign above the coveted item says everything that you always wanted to hear…“Same as CASH. No down payment, interest, or payments until NEXT YEAR!” You’re thinking that’s it. The deal is done. I am going home with that for Christmas and it is going to be the BEST gift EVER! But does it always turn out that way? No.

Now if you planned for this purchase and the money is already sitting, waiting to pay the bill from your Christmas gift line item in your spending plan, congratulations! You really understand how to use the spending plan! However if you didn’t have the money in your spending plan, you should NOT be spending it. Just because you delay the payment does not mean that you didn’t spend it. It needs to be taken out of your line item on your spending plan for Christmas immediately and paid for. If you don’t, you have now incurred personal debt which doesn’t help you be debt free.

If you keep the loan, not only have you increased your debt but in many cases if you go over the “interest free time” specified by the agreement, you could be liable to pay for all of the interest retroactively from the date of purchase. That could be a large sum and not something you put in your spending plan.

And since you never intended to pay ANY interest, I bet you never looked to see what the interest rate is. Right? I bet you can guess that since no one usually pays attention to an interest rate they never intend on paying, you can pretty much count on it being OUTRAGEOUS!

The best idea is to just buy cash and not ever get tangled up in these types of agreements.

12 Things At Christmas That Can Add Debt To Me – 1. Gift Spending Without A Plan

Will you be naughty or nice to yourself? The top item that can add debt to you when shopping for Christmas is to do so without a spending plan. It is imperative that you have a line item in your monthly spending plan for gift giving all year round. I’ll tell you a little secret to help you make sure your gift giving item in your plan is properly funded and you don’t end up robbing your emergency fund on a gift you forgot. It isn’t a surprise or an emergency that many people celebrate Christmas as a gift-giving holiday on the 25th of December every year. So ALWAYS have this item in your spending plan.

Here is a simple example to illustrate a hypothetical plan. If you are a family of four, two parents and two children, and you are lucky, are you have two sets of grandparents, we have 8 people to buy for.  If we plan to spend $120 on each child, $25 for each grandparent, and the parents plan to spend $60 on each other, then the calculations work out like this:

Kids $120 X 2 = $240
Parents $60 X 2 = $120
Grandparents $30 X 4 = $120
Total to save for Christmas Spending Plan item $480
Monthly allotment to save $480 / 12 $40

 

Of course, this plan needs to be adjusted to each individual situation. If the plan isn’t followed it can’t help you. So once you have established one that works within your overall spending plan. “Locke” it in and commit to sticking to it!

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If you have any questions, please feel free to contact myself at sherri@lockeinyoursuccess.com or Dave at dave@lockeinyoursuccess.com and we will be happy to answer all your questions.

We will be taking a break from our monthly webinars but will still continue to post content to our blog, Facebook, and YouTube channel!  When we return we will discuss many different aspects of financial freedom, which will mostly fall into the five categories of business development, real estate, career development, stock trading, and money management.
 

 

Tax Deferral for Real Estate Investors: 1031 Exchange – Podcast

Tax Deferral for Real Estate Investors: 1031 Exchange

 
Switch up your real estate investments and help your net worth grow faster by deferring tax liability. Scott Saunders from Asset Preservation and Christina Nielson from Corcapa 1031 Advisors gives you the details you need to know about 1031 exchanges.

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Lani and Allen Voivod from Epiphanies, Inc. gave so many tips and tricks that you will need an entire notebook for all the great information which will surely help you become a leader in your industry. This session you will want to watch multiple times to be sure capture it all. Enjoy!

Social Media Trendsetting: How to Succeed and Lead Today With Digital And Mobile Marketing

Lani and Allen Voivod from Epiphanies, Inc. gave so many tips and tricks that you will need an entire notebook for all the great information which will surely help you become a leader in your industry. This session you will want to watch multiple times to be sure capture it all. Enjoy!

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10 Tips to Spruce Up Your House to Sell FAST! – Replay

If you are thinking of selling your house or an investment property, don’t miss this fantastic presentation by Amy Parker of Parker House Designs. During the presentation Amy provides some easy and inexpensive ways to make sure your property stands out above the rest!