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. There are many different cash back credit cards available with point systems for different categories of spending.
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.