So back in 2007 Jason & I decided to stop going into debt to buy Christmas presents. You can read all about that in this post.
This is our year 6 update and I have a confession to make.
Yes I can’t do math and realize this is year 7 but since I don’t feel like changing the picture up there we’re calling it 6.
That’s not my real confession though. My real confession is this: Jason and I used his credit card to purchase two large ticket items this year.
I know, I know…BUT HEAR ME OUT…
There is a good way and a bad way to use credit. We used the bad way for so many years that we had been conditioned to think credit cards = bad. We filed bankruptcy in 2008 and surrendered all of our credit cards. We actually didn’t have that much in credit debt but it didn’t matter because when Jason lost his job we couldn’t pay ANY of our debts, so the credit card debt grew and grew and grew.
We got our first credit cards post-bankruptcy in the summer of 2011 and we had a hard rule for using them: NEVER CHARGE MORE THAN WE CAN PAY OFF IN A YEAR
That rule may not make sense to everyone, but it does for us.
So, anyhow…typically we use our cards (we have 3, all with low limits) to buy a tank or two of gas, then we pay it off at the end of the month. If it was a rough month and we can’t pay it off we pay at least 3x the minimum payment. Our plan is working because we’re not carrying a large balance and we are slowly repairing our credit. Our credit scores have gone up over 100 points each since we opened the credit cards. So, our plan is working.
We decided to make two large purchases for Christmas this year and we decided to charge them. One is for Jason and while expensive it has the potential to help us earn money. Even if it doesn’t, it’s something he’s wanted for many years and it will last him many, many years.
The other item is a treat for me and while it won’t help us earn money it will definitely help us save money.
Charging something that costs more than $50 is a major step for us and I don’t feel bad about it. We’re not the same people we were 10 years ago, the people who bought for today with no plans for the future. We learned a lot from our past credit experience and we’ve decided together to never, ever go back there. This is a leap of faith in some respects. We’ve recently talked about buying a home (even though I swore I’d never own a house again!) and carrying this debt for 3 months will go a long way toward improving our credit.
The key is credit responsibility, and we’re keeping our eyes on the future.
As for everything else, it’s all cash as usual, and we have a strict budget. We’re sticking with our plan of one big family present and a couple of smaller things for each child. We’re doing a pirate gift exchange with my family (my kids want to wear pirate hats even) and have a budget for gifts for Jason’s family. Everyone else is getting baked goods (hey, my kid makes some awesome peppermint brownies!) or otherwise homemade gifts.
What is Christmas looking like in your household this year?
Meg,
It’s great to hear how you are working on your budget and such. I too struggle with debt. But, slowly it’s getting better. I got rid of all credit cards but one that is $500 minimum for gas, food, emergency…but it’s paid off each month. I’m a compulsive spender, especially when stressed..so, needless to say, I’m in the hole yet again.. But slowly climbing out. We did a large family gift for Christmas as well with each of the boys getting smaller gifts under the tree with a maximum for each, and only paying with cash this year. It has helped acing the cards and paying cash. Still hard to stay on budget and couponing, but slowly making progress. It definitely helps to have a partner to keep you on track!
We don’t celebrate Christmas but we do celebrate Hannukah. Usually I give 8 gifts to the kids (my son and one niece) and 1-2 for the adults. This year I only gave one to everyone except my son. He gotone big one the first night and!one small one every other night. I got everyone something they could really use this year as opposed to past years when it was just wants. This is the year I’ve spent the least and everyone was happy so I’ll continue this next year with everyone even my on. Although it is nice to get him the small gifts like on the 2nd night he got a book about Hannukah the 3rd night he got some felt the 4th he got a new dreidel.