Debt Free

It never ceases to amaze me how many well meaning people put themselves in financial jeopardy every year by ratcheting up their debt to new heights during the holiday season. Far too many otherwise sensible folks are convinced they have to get the perfect gift for everyone in their family and circle of friends. Why?? As we get older and more of our friends and family have kids, do you realize the level of commitment that requires? You are able to devastate your carefully crafted plan to get debt free with a few short trips to the mall and a couple hours at Amazon.com.

Stop already. Why this phenomenon exists is beyond me, but there are better choices than mortgaging your financial future for the satisfaction of getting Aunt Mable that espresso machine she's been pining for. Think about it for just a fleeting second, please! Swallow your pride, along with that piece of cheesecake, for a moment and talk to your friends and family about coming up with a plan so the lesser compensated among you don't fall off the debt precipice buying presents for everyone. I know it's hard, but you really can strike out in whole new direction.

One plan that may work is that you only get gifts for the kids. Unless you just have to get them a Nano or that latest PS3 game (you can resist), you can make the kids happy for about a Jackson or two each, probably much less. Christmas is really for the kids anyway. The rest of us can celebrate the real reason for the holiday without exchanging gifts with every single person we've ever met. Most kids these days probably get too much anyway. Teach them about the joys of giving. Try boxing up some of the toys and running down to the local Toys for Tots donation or something. The Marine Corps does a great thing every year with this program.

As I survey the bounty my kids receive every year, I never cease to be amazed that they get far more than I ever got as a child, yet we actually get them very little. Even if the relatives only get them one thing each, it adds up in quite a hurry.

According to the U.S. Federal Reserve Board, the average Financial Obligations Ratio (FOR) for U.S. consumers (adjusted, Q3 2006) is 19.35%. This financial ratio describes the ratio of debt payments and home owner's insurance to disposable personal income. It didn't cross 19% for the first time until Q2 of last year. For years it's been slowly climbing, taking a bit of a vacation for a while in the early 90's, but usually moving ever upward. For the sake of all that's financially responsible, don't help it!

Some other holiday debt reduction plans can include actually making gifts for family members. I realize that unless you're pretty sophisticated, you'll have a hard time pressing that DVD of 24, Season 4, but well, sacrifices have to be made, I suppose. Maybe your family is secretly wishing the madness would stop as well, and they're too scared or proud to actually initiate a conversation along those lines. Think of it. You'll be a hero if you actually start a gift reduction dialog! Everybody can actually pull back from the edge a bit, and stop trying to max out the Visa trying to impress with the coolest gift.

Have a contest to see who can give the best gift while spending the least amount of money, then give the winner a gift (ironic, huh?). Let creativity reign. Everyone can have a great holiday season without feeling the dread that can creep in knowing that you're boosting up your credit card balances to stratospheric levels. Something to think about for next year.