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.

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 25^th 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:

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!