It isn’t even November yet and for several weeks stores of all kinds have been setting out festive Christmas wares to prime the pumps for the consumer-driven Christmas spending spree. You go to buy socks and have to walk past two or three aisles of fake Christmas trees, stockings, and gift wrap ready to be sold with the friendly reminder that you need to spend yourself to death in just a few more weeks.

If I’m being completely honest with myself I’d say I can’t blame the stores, really. A vast majority of revenues and profits for stores that serve consumers come in this time of the year. For many their entire existence is based upon having great holiday sales numbers. Without high sales, the store may not make it to next Christmas. If I were in their shoes I too would hype up Christmas as much as possible to make sure people were spending at my store.

Even if that meant setting out Christmas deals more than two months in advance.

But amidst all the holiday cheer, the $1 gift wrap, the boxes of cards, and the spending mentality is something much more sinister: debt.

Debt: The Gift That Keeps on Giving

The real “gift that keeps on giving” is debt because of how interest will continue to compound on those purchases you made that you couldn’t really afford but bought anyways.

Instead of the promised holiday cheer and enjoying time with family we end up worrying about how we are going to pay for next month’s credit card bill. We worry that Dad won’t like the expensive gadget we just sacrificed the next three months of budgeting on the altar of spending.

We’re promised a magical world that doesn’t exist; a world where stuff makes us feel just right. (In fact, quite the opposite is true. A study done by Cornell University shows that experiences far outweigh buying more things. Unclutterer has a good write up on the study.)

It’s a tragedy because stores know it and credit card companies know it, too. Ever notice how right after Christmas there seems to be a big push of 0% balance transfer credit cards? Those don’t just happen out of coincidence. The marketing minds at these firms know you will overspend at Christmas, hit New Years, and decide to do something about your debt once and for all. So they give you a convenient lifeline to bail you out.

The True Cost of What the Average Family Spends

The average amount a family will spend on Christmas gifts this year will likely end up at around $800 total. In previous years the amount has hovered between $700 and $800, so I’m just taking the high end of the estimate.

Now let’s all consider that a majority of Americans are in debt. And some of those people are struggling to keep their budget afloat, not to mention pay off extra debt.

Someone in this situation is going to have a new minimum payment to deal with on the budget for quite some time if they spend more than they have this Christmas. A person in this situation that adds an $800 balance to a 17.99% card with a $30 minimum payment will be paying on the card for 4 years and 4 months. Four and 1/3 years just to pay for one Christmas. Ouch.

On top of that they will pay $306 in interest or 38% of a second Christmas. That’s money they will never see again.

Going into debt for Christmas just isn’t worth it.

How to Prepare for a Debt-Free Christmas

Having a memorable Christmas is nice, but you don’t have to go into debt to enjoy the holidays. Here are a few ways you and your family can prepare.

Focus on Experiences

As mentioned above money spent on experiences far, far outweighs money spent on stuff. Stuff is a burden, stuff has to be stored, stuff has to be dusted. Good memories don’t have any of these problems and can be brought on display for free. Grab a digital camera and enjoy some time together, then print the photos off as “gifts” to each other.

Agree to a Gift Embargo

As part of focusing on experiences, why not agree to not give the gift of stuff this year? A gift embargo can put everyone at ease from the dreaded “Oh you got me a gift, but I didn’t get you a gift and now I feel bad so I’m going to go buy you a gift tomorrow” sensation.

No one buys a gift. Everyone spends time together. Your hearts and wallets end up better.

Do Something for Others

One potential outlet for your experience time together is to do something for someone else. It can be other friends or people less fortunate than you. Volunteer at a soup kitchen or homeless shelter over the holidays. I’ll be shocked if you don’t come away with a great experience that also puts into better light just how blessed you truly are.

Only Buy What You Can Pay Cash For

If you really want to buy gifts for your family no one is going to stop you. But please, for the love of all that twinkles red and green, don’t go into debt to buy this stuff. You can use a credit card to pay for the purchase, but you must set aside cash to pay the bill rather than getting in over your head. Better yet use a debit card or cash to make sure you don’t overspend.

Use Layaway

Some stores will let you decide to buy something now, have it saved for the future, and even let you make payments leading up to the pick up date. Sometimes you have to pay a fee, which I wouldn’t recommend (stick to buying what you can afford), but if it is a free service this is another way of buying something without going in over your head. You have to make the layaway payments to be able to buy the item at the end of the day.

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