It’s mid-November, and I know what you’re doing: you’re often thinking about Christmas presents, their cost, how you are going to pay for them and how much credit card debt you willing to undertake to make everyone in your gift exchange list happy.
Am I right?
If the Christmas and/or Hanukkah season sends you into depression and fear and trembling, take heart, because there is a solution: a savings plan.
You can create a savings account, which is designated for your holiday spending, and you can put money into it every month, starting in January, toward the next Christmas. You can determine the amount of money you want to deposit every month to give you a decided-upon total, and you can even have it set up to be deducted from your checking account or paycheck automatically so you don’t even have to give it another thought once it’s up and running.
Then, when you’re ready to hit the malls and Internet, the money is there to pay for your expenditures, thus rendering Christmas the enjoyable time of year that it’s supposed to be rather than striking terror.
And rather than putting you into credit card debt that you can’t pay off until the next holiday season comes and goes … and sometimes not even then, you should be free and clear to start saving for the following Christmas (assuming you stay within the budgeted amount.)
Interestingly enough, there hasn’t been a lot of hooplah about Christmas savings plans in recent years here in the United States, although about three decades ago, they were very much in favor. (As credit card debt has increased, maybe Mastercard and Visa put pressure on these savings plans and their institutions to disband them so people are forced to use their credit cards instead? Is there a conspiracy theory brewing here? Probably not …)
I don’t know exactly why they fell out of favor here in the U.S.; maybe financial institutions didn’t see enough profit in allowing people to open savings accounts with such a low balance to begin with. After all, if you’re investing, say, $100/month into your Christmas club, it’s quite a while before there’s enough of a balance to make it worth the bank’s while to do the required paperwork and handling of such an account. Maybe it just wasn’t worth the trouble.
Another important facet of the old Christmas clubs, as they were called by financial institutions, was that they didn’t pay interest. Starting December 1 for the following year, you could begin putting in your money and then making a deposit every month thereafter until some time in November, when you were paid whatever amount you had put in … and not a penny more. No interest was accrued to your account. After all, the bank was supposedly doing you a big favor by allowing you to keep this money separate for Christmas spending so that you wouldn’t spend it elsewhere and then have to run out and use those darned credit cards. Thanks a lot, Big Banking!
Today, however, there are financial institutions where you can set up a Christmas savings plan and be paid interest on the money you deposit each month, with no service charge for the amount being fairly low to begin with.
So here’s how to start a Christmas club of your own: first identify the financial institution where you’re going to open the account. Once you have ascertained that you will collect interest but not be charged a service charge (perhaps this smaller account can be tied into your other bank accounts as the “freebie” you’re needing and asking for), open the account. Make sure you open it by December of this year for saving toward Christmas of next year, because you’re going to need to withdraw the money some time next November.
Sit down with your Christmas gift list and figure out a ballpark amount that you will need to spend to make everyone — including yourself — happy. Be realistic. Work within a budget to allow you to participate happily in the holidays but won’t break your back financially. Once you have decided on this amount, divide it by 12. This is the amount you must deposit every month for 12 months. If it helps you, have it automatically deducted from your checking account or paycheck so you don’t accidentally spend it elsewhere.
I think you will be so excited when you go to the bank some time in November of 2008 and have a check handed to you that it will allow you the joy of spending on others for the holidays! Try it! I believe you’ll have a new interpretation of “Joy to the World.”