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The Gift That Keeps On Taking

We are about to wrap up March, the third month of 2022. Are you still paying down a credit card that you used to purchase Christmas gifts on?

That is the true gift that keeps on taking, not my punny image for this blog.

Each month that card retains it's balance is a month you sent interest money to Visa or Mastercard that could have been used to build your savings or invest for your future. If you want to prevent that for this year, let's dig into the steps you can take toward that goal!

First, you should pay off the current balance of your credit card(s) as much as possible. The more principle you pay down, the less interest you are charged and the further your monthly payment goes to ending that debt, if not just the interest charges. Having a monthly budget where all of your expenses are planned and tracked can go a long way to helping ensure your payments are consistent.

Second, I strongly encourage you to plan ahead for this coming Christmas. I have it on good authority that it will arrive on December 25, 2022. That means you have 8 or 9 months to prepare. What if you had $400 saved for Christmas gifts by the time Christmas came around? What about $1000?

One way to prevent putting gift purchases on a credit card is to have the cash on hand in December. You can accomplish this throughout the year with what we call a sinking fund item in your budget. This is something you contribute regularly to each month and it builds up cash for a specific purchase or purpose.

For example, putting $50 into this budge item each month from now until Christmas should allow you to save at least $400. If you save $100 instead, you can save at least $800 by December. The more you intentionally save each month, the larger your Christmas stash of gift-buying cash will be!

Finally, staying within that limit of how much you have saved will allow you to avoid paying interest on the gifts for months to come. Perhaps imagine what it would feel like to go into 2023 without the stress of large credit card bills and the fact that each and every gift you bought you could afford.

Will you make this year such a year?

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