Will That Be Cash or Credit Card?

The Season of Giving is upon us! Can you pay cash for all your purchases or does your credit card company fall in love with you all over again this time of year? If you are cash and carry, you’re excused from reading this post. The rest of you, maybe there’s a suggestion here that will help.

Tugging at your heartstrings…

Christmas may come at the same time each year, but the advertising and the tugging at your heartstrings seems to start earlier each year. Toys and gadgets and styles and Insta-pots seem to get more sophisticated all the time and, therefore, more expensive each year. (I threw Insta-pot in there because it consumed my Facebook feed for weeks, every woman seemed to need one – I’ll be honest, I’m not sure what it is!)

I have really strong opinions on Seasonal Giving but that’s not the focus of this article – maybe it’ll be a subject for next Fall.

I am going to presume you buy gifts at Christmas (excuse the political incorrectness of that term – it gets the point across for most people). If you have engorged credit card bills this month and next, then I will also presume you spend more than you have ready cash for.

Here’s a suggestion!

Here’s my suggestion, and it’s one that’s worked for me for years, even (especially?) when I was the single parent of three teenagers.

Let me digress now to your daily household bills. In Canada, we have electricity, sometimes water, telephone, oil or gas for heating perhaps, insurance, even garbage collection. Most of those bills can be averaged into a monthly fee and that is what you pay, no matter the usage. For example, even though you use little electricity during the summer, you pay the same as in the winter so credit can build on your account and you don’t have huge expenses from November through March.

For my solution, my example will be an electric bill for which you pay $100/month, or $1200/year (I love round numbers!). Why don’t you automatically pay $120/month starting in January? Keeping in mind the $1200/year number, this means you will have paid the yearly total by the end of October. Discontinue those automatic payments, and this frees up $240 in November and December for seasonal spending. While $240 may not seem like much, that’s only from one bill. My oil heat was a large monthly fee and overpaying each month freed up another $400 for me. What other bills do you have?

If you extend this model across all your household expenses, the amount of available cash you have in December keeps you from running up those credit cards and getting hit with serious remorse in January. Trust me, if you’re on a budget, January instantly seems sunnier!

It’s not a theory!

I’d love to know what you think of this idea. It’s not a theory, it worked for many years and even, as mentioned, when I had three teenagers to account for. If you need more incentive to give it a try, add up all the interest you pay on those credit cards between now and “Paid In Full”.

If you’re on a budget and still have no credit card debt in January, share your secrets in the comments too!!

Happy Season!