Seth Godin pointed me towards this video of children opening Nintendo Wiis on Christmas morning (it’s well worth watching at least the first minute or so of the video):

Here’s the original page if you can’t see the embedded video.

While I was watching it, I was caught up with two strongly conflicting feelings.

At first, I felt happy for the children. Overjoyed children, on some level, always make me feel happy. I’m reminded of the unabashed joy of some of my own childhood moments, plus I can’t help but consider the happiness of my own children, too.

Yet, as I kept watching, the video began to unnerve me. These children were expressing an enormous amount of joy due to receiving an expensive consumer electronics item. I couldn’t help but think of Christmas 1987, where I reacted in a very similar way to receiving a Nintendo Entertainment System. It is still the single strongest memory I have of a childhood Christmas – and I remember the near ecstasy I had when my parents brought that item out of the bedroom.

What brought on such huge anticipation and excitement in a consumer product? For me, there were a lot of factors – friends at school were a big part of it, as were television commercials and, to a degree, my parents played along as well. They would encourage me to mark things that I wanted out of toy catalogues, for example, and I can remember drawing many, many circles around the Nintendo that year.

The end result? I spent more than a month in a fever pitch of anticipation about Christmas, hoping I would receive a particular item, and I was in an intensely excited frenzy when Christmas morning finally arrived. It was an emotional crescendo – and, frankly, it was the exact way that Nintendo’s marketing department hoped it would end, with a huge rush of happiness associated with that consumer product. Is it really a coincidence that our home currently has several Nintendo products in it? Likely not.

When I see those children in fits of ecstasy, I see children beginning to assign happiness to consumer goods – and that worries me. For most of my early adulthood, I did that very same thing – I convinced myself that my happiness was directly connected to what material items I had. I’d buy things and barely use them because of the rush of owning that product, and I’d quickly buy into marketing plans of all kinds. In some ways, I still do.

So this leaves the question: how can I tie together these scenes of Christmas delight with my own conflicting desires as a parent? Obviously, I want to create happy childhood memories for my kids and I also want them to actually have at least some of the things that they desire, but I also don’t want to create the type of emotional association with things that these kids are developing – and that I once developed. Here are my thoughts.

First, I won’t encourage my children to ask for anything for gifts. This discourages obsessing over Christmas lists and the like. Instead, I’ll just focus on paying attention to them – what are their interests? What are they passionate about? This requires more footwork, but it also stymies a focus on consumerism.

Next, I’ll work diligently to create positive memories with my child that aren’t associated with consumer products. Instead of leaving my children to their own ends – or spending time with them focused on consumerism – I’ll try hard to create happy memories that don’t revolve around things. I’m already actively doing this with my children – in just the last few days with my son, for example, he’s helped me make supper, we’ve played catch, we’ve wrestled in the living room until he’s laughing his head off, and we’ve also read a pile of library books together.

Finally, I want to reinforce in my children the power of giving over receiving. My childhood was often centered around the stuff I could get – there was very little focus on giving to others. We did not write thank you notes for gifts, nor was I ever really encouraged to think about giving to others, either in terms of charities or to loved ones for gift-giving occasions. I feel that this attitude contributed greatly to my financial problems in early adulthood, and I fully intend to work to implant different values in my own children.

I want my children to have a thoroughly happy and fulfilling childhood, but every time I watch that video, I feel that long term happiness is somehow being traded for the short term. That’s not a trade I want to make with my own children – there is a different way, and I intend to find it.

As you read this, my children are likely passed out on the floor from tearing open presents, emptying stockings on the floor, running around in a Christmas-induced sugar rush, and a big dinner with friends and family.

As for me, hopefully I’m taking a big Christmas nap in a comfortable spot somewhere.

Hope you have a very merry Christmas! Please share your favorite Christmas gift (either given or received) in the comments.

See you tomorrow!

Every year, the Christmas season brings forth a wide variety of feelings for me.

I’m flooded with memories from my childhood – time spent with relatives that are long since past, opening memorable gifts, and the annual centerpiece of a great Christmas meal. Those memories largely fill me with joy, but with just a hint of sadness from missing things that cannot be reclaimed.

I’m filled with happiness with the time I get to spend with my family. To me, that’s the real highlight of the season – the time spent with people I care about.

I’m often filled with stress, too. It often feels that the week around Christmas is filled with a lot of obligations – gift exchanges, lots of people to visit, long trips to spend a day or two with family. It’s actually much more difficult than it used to be, since we now have to bundle up our two kids for the trips and it often feels that we spend much of Christmas simply going from place to place, unpacking and packing, bundling up kids, and often leaving where we’re at just barely after we get there.

These elements mix together into a soup that can be very dangerous for my wallet. The mix of positive sentiment, a desire to spend time with family, and the stress of the season often results in little spending mistakes – ones that add up over the length of the season.

The end result of that? An unexpectedly large credit card bill in January.

Here are some tactics I use to avoid these ups and downs.

First, I make an effort to not overschedule things. It’s more important to me to spend quality time with the most important people than to merely touch base with a lot of people, many of whom aren’t quite as important to me. That means saying “no” to some holiday invitations, even if they sound enjoyable.

Second, I try to plan ahead as much as possible. We do things like remember healthy snacks for the car (meaning there’s a greatly reduced chance that we’ll stop for food on a car trip), pack a few small “extra” gifts (ones that we’d be okay with keeping, but they also keep us from making last minute emergency trips to the store to spend more than we should), and make sure we have an emergency kit for our car (enabling us to deal more cost-effectively with any emergencies).

Next, I recognize that I can’t solve family or personal problems with expensive gifts. Buying someone a great gift will put a smile on their face, but it won’t repair a broken relationship or mend fences. Those things take time, conversation, and understanding, not a show of material largesse. Instead, we’ve focused on good gifts that really match the recipient and clearly tell them that we care without diving into ostentatiousness.

Finally, I won’t turn down the generosity of family and friends. If a friend or family member invites us to stay with them, I’ll happily accept. If we’re invited to share a meal with someone important to us, we’ll break bread with them. I used to let pride stand in the way of such offers and often argue that I didn’t want to be a burden, but I came to realize that such offers are made because people want to share with you and help you, and it’s completely polite to accept what’s offered.

The Christmas season is about people, above all else, but that doesn’t mean that the holiday season makes it okay to mindlessly break out the cash or the plastic. Keep your wits about you, plan ahead, and this year you won’t be left with the big bill in January.

While I recuperate, I’ll be sprinkling in a few guest posts from some of my favorite personal finance bloggers. This is a guest post from J.D. Roth, who writes about smart personal finance at Get Rich Slowly.

Every year, people lament the commercialization of Christmas, yet few are willing to do anything about it. Christmas displays now appear in August. Black Friday’s mad rush only grows madder. But, as Trent has noted, gifts that matter don’t come from Wal-Mart.

Unplug the Christmas machine
My wife and I take pleasure in creating homemade Christmas gifts, as do many of our friends. But even these are secondary to the time we spend “playing Santa”, driving around making holiday deliveries to the people we know. As we chat on porches or sit in living rooms, sipping hot cocoa and fawning over children, it’s the bonds of friendship that are important — not the gifts.

In fact, I believe it’s rituals like our Christmas delivery that form the heart of a meaningful season. Traditions add layers of texture to your life which last not just during the holidays, but throughout the entire year.

My public library carries a great book about this subject, and I borrow it every year just before Thanksgiving. Unplug the Christmas Machine by Jo Robinson and Jean Coppock Staeheli urges readers to escape the commercialism of the holiday season, to make it a “joyful, stress-free” time for the family.

The four things children really want for Christmas
In a chapter entitled “The Four Things Children Really Want for Christmas”, the authors write:

As early as the age of four or five, [children] can lose the ability to be delighted by the sights and sounds of Christmas, only to gain a two-month-long obsession with brand-name toys. Suddenly, all they seem to care about is how many presents they will be getting and how many days are left until they unwrap them.

Many parents find it a challenge to create a simple value-centered Christmas in the midst of all the commercial pressure. But the task is made much easier when parents keep in mind the four things that children really want for Christmas.

Robinson and Staeheli argue that children don’t really want clothes and toys and games. The four things they actually want are:

1. A relaxed and loving time with the family. Children need relaxed attention. During the holidays, normal family routines are temporarily set aside for parties, shopping, and special events. It’s important to slow down and spend quality time with your kids.
2. Realistic expectations about gifts. Kids enjoy looking forward to gifts and then having their expectations met. The key is to manage their expectations. By educating them about what “Santa” can afford, and is willing to give, it’s possible to prevent disappointment on Christmas morning.
3. An evenly-paced holiday season. The modern Christmas season starts months before December 25th, when the first store displays go up. Things end with a bang on Christmas day. The authors suggest beginning the season late in the year instead. Get out the Christmas music on December 15th. Pick out a tree on the following weekend. Schedule some low-key family events during Christmas week. Stretch the season to New Years Day.
4. Reliable family traditions. When I talk to my friends about what Christmas was like when we were Children, it’s not the gifts that we remember. We recall the things we did as a family. I remember sleeping next to the tree every Christmas eve, but never being able to catch Santa in the act. I remember seeing the cousins. I remember decorating the trailer house. Your kids will remember the traditions, not the gifts.

That last point is so important: it’s the traditions that make this season special, not the gifts.

Holiday traditions
Lynnae from Being Frugal recently produced a video highlighting one of her family’s traditions. “To count down the days until Christmas, I wrap up 24 of our favorite Christmas storybooks…Every night before bed, my children get to pick out one book from the stack, and we’ll read it before bed.” It’s like an Advent calendar made up of books!

When I was a boy, one of my favorite traditions was listening to The Cinnamon Bear, an old-time radio program broadcast by a local station every evening at 7 p.m. This was a pre-bed ritual for years, and one I treasure to this day.

I know that toys and the games were important to me when I was a child. As an adult, however, the only present that I actually remember was my Evil Knievel Super Stunt Set. All of the other toys are forgotten. But the memories of cooking, cousins, and Christmas lights still remain.

Wherever you are and whatever you do this holiday season, I wish you the very best — Merry Christmas.

Many of you out there reading this are hurting.

The economic news is grim, and even though I believe the only thing we have to fear is fear itself, that doesn’t change the stark reality of things.

Most of us have lost a large swath of our retirement savings in the last year. My overall retirement savings has gone down about 30% over the past thirteen months, even with late 2007 and 2008 contributions.

Some of us have lost our jobs. I have at least three friends who have been downsized in the past calendar year.

All of us are uncertain right now – and that’s understandable. We’re looking towards living cheaper and letting go of the cultural trend towards overspending that has happened over the past several years.

Right now, many of us are looking forward to December – and to the holiday season – with some joy and some trepidation.

Can we afford to travel this year?

Can we afford to put a lot of Christmas presents under the tree – or should we?

Shouldn’t we scale back this year – big time?

Don’t worry. You’re not alone. I’m asking myself these same questions, as are millions of others out there.

But the answer to it is easy – and it’s right in front of our faces.

It’s easy to get caught up in the expenses of December – the parties, the presents, and the inevitable bills.

But that’s not what the holiday season is about.

It’s about time, not money. It’s about sitting around with your favorite loved ones, telling tall tales and playing games. It’s about the bright smile on your child’s face regardless of what’s under the tree. It’s about holding your grandmother’s hand and wishing her a merry Christmas, knowing that she’s been there for you over and over again throughout your life and also knowing that she might not be there forever.

So, yes, by all means be frugal this Christmas when it comes to your money. Cut back on the extravagant presents and focus on more thoughtful items. Tone down the scale of the parties – there’s no need to have a huge bacchanal this year.

But don’t cut down on the time. Savor every minute of it.

Because in the end, the time you spend with the people around you is the most valuable thing of all. No expensive present, no ostentatious party, nothing can compare to that time.

A less expensive present than usual is quickly forgotten. What’s remembered is the time spent together.

It may be a long December for some, but few things will make it better than focusing on what’s important and letting the rest drop off to the side.

And its been a long December and theres reason to believe
Maybe this year will be better than the last
I cant remember all the times I tried to tell my myself
To hold on to these moments as they pass
- Counting Crows, A Long December

(Yes, that’s me in the picture.)

With the Christmas holidays sneaking up on us, we’re very, very glad we saved ahead for the Christmas season around here. In fact, our Christmas shopping is in full swing and we have several people marked off already.

Isn’t that jumping the gun a little? I don’t see it that way at all. Instead, I see it as a recipe for saving money, giving thoughtful gifts, and creating a memorable Christmas holiday. Here are eleven tactics to do just that.

Decorate in a sentimental fashion. For me, Christmas isn’t Christmas without using a set of handmade Christmas tree ornaments that my mother made for me when I was young. She made a few a year for more than a decade, eventually making a very beautiful set that I remember fondly from my early years. Then, during the first Christmas I had in a home of my own, my mother gave the ornaments to me. They are the centerpiece of all of our decorations. Rather than buying cheap disposable decorations that you’ll toss out in a few years, make your own – high quality ones that will last for many, many years. There are lots of ways to do this – ceramics, wood, and so on. If you don’t have artistic ability, you can still simply seek decorations made by others that are well made, have personal meaning to you, and will last for many years.

Write thoughtful notes, not mindless cards. Several people I know send out about two hundred Christmas cards a year. They’re generic cards, merely signed and without a note – and thus I feel indifference when I look at them. Instead of plopping down money for a mass mailing of meaninglessness, spend some time writing notes to the people you genuinely care about. That way, you’ll reduce your cost (fewer “cards” sent out and less expensive “cards”) and provide something of value to the recipient.

Focus on thoughtful gifts, not showy or expensive. A ten dollar gift that actually matches a recipient well means far more than a thirty dollar gift that’s useless to the recipient. But how can you know what to get? If you’re stymied, make a list of the interests that the recipient has – think hard about it. Then, research one or two of those areas and find intriguing and useful gifts in that area. Know a golf fan? Get that person a box of the latest, greatest balls.

Make gifts for more casual exchanges. Make and can a batch of caramel pear butter, for example, and give away jars of this in an exchange. It’s a gift that most people will appreciate and if you make a large batch of it, it’s pretty cheap per jar. In fact, my wife and I are planning on giving many people gifts like this for Christmas.

Be selective about the gift exchanges you participate in. In the past, I’ve been encouraged to exchange gifts with as many as ten different groups at Christmastime, each one expecting a gift in the $20-30 range. That wound up being very, very expensive – and very time-consuming, too. Instead of just agreeing to be in every gift exchange that comes along, bow gracefully out of a few. Suggest to the people involved that they just skip the exchange and instead just have a pleasant potluck dinner instead, saving everyone some cash.

Set a strict dollar limit for what you will spend on each person. When you’re writing your list, set a dollar cap that you’ll spend on each person and literally write it next to that person’s name. This will help keep your focus – just like a shopping list.

Buy one nice gift instead of multiple less expensive gifts. When buying gifts for a spouse or a parent or a child, you may be tempted to buy a lot of gifts. The problem with buying a lot of gifts is that not only do you avoid putting as much thought into each one, you also end up restricting your gifts to inexpensive items. Instead, focus on one or two very nice gifts instead – ones that you can put a lot of thought into selecting the right thing.

Start shopping now for those gifts – the earlier the better. Right now is the best time to start that Christmas buying process – in fact, you’re better off starting even earlier. Think of ideas, write them down, and seek them out through comparison shopping. The longer in advance you plan a gift, the more time you have to wait for the perfect price on eBay or by comparison shopping.

Stagger gift purchases so that you’re not putting the purchases on credit. Many people go on a giant rush of buying right after Thanksgiving, then are hammered with a huge credit card bill in late December or early January. Don’t let that happen to you. Buy a few gifts now, a few more in a few weeks, and so on – and consider paying in cash, too. This way, you won’t face the mountain of purchases all on one bill (or set of bills that arrive at the same time).

Use newsprint for wrapping paper. Few things make better wrapping paper than newsprint. It looks distinctive, it can be colorful if you choose the right pieces (like the comic pages), and it’s basically free. Isn’t it better to spend an extra $10 on someone’s gift than wasting it on paper that just gets torn up on Christmas morning?

Start an automatic savings plan for NEXT Christmas NOW. Seriously. You have roughly 60 weeks until next Christmas. Start putting $5 a week away right now. Putting that in a savings account that returns 3% annually would give you $305 to spend on next year’s Christmas expenses – just $5 a week!

My father likes to joke that the happiest day of the year is December 25, and the saddest is December 26, because that’s when the bills start arriving. While I’d like to chuckle at that joke, a pile of credit card bills isn’t really very funny – in fact, just thinking of it brings back some sad memories. Here are six ways to deal with a pile of post-Christmas credit card bills – and also prepare yourself for minimizing that mountain of bills next year.

1. Think carefully about what went right – and what went wrong – this year. There were likely some gifts you gave that were great bargains and others that were overpriced duds. What can you learn from that? What sorts of gifts are really great bargains for the people on your list? For example, I could spend hundreds on my grandmother, but one gift that will always make her really happy is gourmet coffee (and related supplies) – so why not just focus on finding gourmet coffee bargains out there.

2. Start saving for next year now – and do it automatically. Sign up for an online savings account, like one at ING Direct (the bank I personally use) or HSBC Direct (another solid choice). Once you’re signed up, set up the account to withdraw $20 a week from your checking account. Magically, at the end of next November, that account will have nearly $1,000 in it for you to spend on Christmas gifts (after 48 weeks, it will actually have somewhere near $970 in it, depending on interest). That can help pay for much of the Christmas expense and not leave you facing a mountain of bills.

3. Do your incidental shopping for next Christmas in the next week or so. The week after Christmas is the best time to buy wrapping paper, ribbons, cards, tags, and so on for next Christmas. Pick them up at 50% off (or better) right now, then toss them into storage for eleven months. You can save some decent cash doing this. We do it every single year.

4. Make your Christmas list now for next year. Make a list of everyone you plan on buying gifts for next Christmas, then start keeping an eye out for gifts right now. For example, I have next year’s list largely ready to go, along with gift ideas for many of the people. This enables me to spend the entire year finding huge bargains on great gifts. I just simply look for the items on sale over the next twelve months.

5. If you’re going to drop your Christmas shopping on credit next year, make sure you at least have a decent credit card. Don’t just use the trusty ol’ generic MasterCard or Visa in your wallet. Instead, investigate other options and move to a primary card that can actually stick some useable and valuable rewards in your pocket. Our primary card gets us about 3% cash back, for example, when averaged out over all of our purchases.

6. Look for “better” ways to pay off the bills. Your local credit union or bank might give you a low-interest personal loan which you can use to eliminate your high-interest credit card debt – alternately, you could consolidate all of it via balance transfer onto a card offering a 0% APR balance transfer. You might also use this opportunity to clean out your closet and get rid of a bunch of stuff you don’t really need, selling it on eBay or at a local consignment shop.

As for us, we’ve actually already made our 2008 list of people to buy for, and we’re headed out to buy wrapping paper, bows, cards, and the like on Friday.

As I sit here surrounded by torn wrapping paper, empty boxes, and a room full of children happily playing with Game Boys and puzzles and Matchbox cars, it occurs to me that this is the first Christmas since I was still in school where I didn’t have an underlying nervous sense of worry about how I was going to possibly pay for all of the gifts.

I know that many of my family members used plastic to cover their Christmas gifts. One friend of mine actually did a house refinancing to get rid of the credit card debt of this Christmas and of Christmases and other unnecessary purchases.

It is a deep psychological relief to not have to worry about any of that. I just stick to one basic principle – spend less than you earn – and I work as hard as I can to make that gap between what I earn and what I spend as big as I can. The end result of that is financial freedom – the ability to do the things I want to do.

Financial freedom isn’t about the best way to manage your bank account – it’s a tool to get there.

Financial freedom isn’t about optimizing your investments – that just ensures that your money is doing good things for you.

Financial freedom is about being able to sit here with a glass of egg nog, watching a house full of people enjoy their Christmas presents, and not have the slightest bit of worry about anything more than when the traditional Christmas ham is going to be done.

It also means that I can give the gifts I truly want to give without worrying about the money, and it means I can sit here and laugh and smile and eat Christmas cookies without any real worry in my heart.

It’s truly the best Christmas gift of all.