Independent, Fee-Only Financial Advisor

Independent, Fee-Only Financial Advisor

Thursday, October 20, 2016

#TBT Nancy's Christmas Wish List

We're headed back to the mid-90's today for a few words of caution from Nancy about taking on too much holiday debt. There's nothing like a mountain of credit card debt to put you on edge. And during the holidays, well, it only increases the chances that a family fight will break out while you're passing the sweet potato casserole. On top of that, it just makes your New Year's Resolution all the more predictable (probably pay off credit cards again).

Nancy has four wishes: ring in the New Year with no credit card debt, teach the kiddos about money management, be less greedy, and share. Her extra wish is for Peace on Earth. This was 1996, though, before Elon Musk put Mars on the horizon. So in a few years, we'll have to amend that to Peace on Earth and Mars. Or maybe just Peace in the Milky Way. (And thanks to Ryder's sister, Lila, for letting us use her picture of the Milky Way. Check out her work at

Enjoy reading Nancy's Christmas Wish List!

When I was only a year and a half old, I ran under the kitchen table and chipped my two front teeth. Both had to be pulled, and I spent the next five years singing, "All I want for Christmas is my two front teeth." My greatest wish was to be able to eat an unpeeled apple.

Well, my permanent teeth finally came in and filled the gap in my smile and the wish on my list. Other Christmases have come and gone, and my list has varied with each. There was the Easy Bake Oven I so desperately wanted but didn't get.

There was the year I wished for a certain gift under the tree to be the most spectacular thing I'd ever seen, only to find my brother had wrapped a bundle of switches and fooled me into thinking otherwise.

This year, I have a Christmas wish list for you.

First, I wish that you would end the Holiday Season with no credit card debt. Now, there's a big wish! In fact, it seems almost impossible. With every store hawking instant credit and every member of your family clamoring for more, how can anyone pass into the new year without a stack of credit card bills?

The first way to avoid this debt is to prepare throughout the year. I remember having a Christmas Club account at the local bank when I was in high school. I decided on an amount that I wanted to save through the year. The bank gave me coupons which I deposited with my money. When Christmas came, I simply withdrew the account and went on my shopping spree. It's a great idea, even though these accounts don't pay much in interest.

I'd suggest using a good money market to save for the season.

Look back at past years to judge how much you'll need and divide this amount by 12. Although Christmas is an annual event, it should be part of your budget each and every month. This is not like an emergency cash fund. After all, you know Christmas comes once a year, and you know about how much you'll spend. Be prepared.

But it's just past Thanksgiving and you haven't saved a dime yet.

Now what? The first thing you need to do is resolve to do better next year. Then you need to take a serious look at your cash needs for Christmas. Too many people indiscriminately rack up credit card debt and find themselves still paying for Christmas in July. Decide on a limit and then shop for the best debt deals.

You may find a credit card offering introductory rates in the 6-8% range. Take advantage of these to help you pay off your purchases. You may also be able to purchase some big ticket items on a no interest rate arrangement. Such as "90 days same as cash" or "no interest charged till June, 1997." Use these, but be prepared to completely pay off the debt before the interest kicks in. Whatever you do, avoid using those double digit interest cards to cover your holiday shopping.

If you use low interest rate cards to finance Christmas, give yourself a deadline to pay these off. Be reasonable. Try to have everything clear by Easter. If this is not possible, reconsider the purchases.

My next wish is that we teach our children about money management. This can be done by making gifts of savings bonds, mutual funds or even individual stocks. You can do this through a custodial account. Give them something that will grow through the years, and let them learn about the financial markets along the way. Some funds will let you get started with as little as $50. It's a great way to save for college, and it's a great learning tool.

My third wish is that we not want so much. Retailers nationwide look to the holiday season to boost their profits. But while their profits are boosted, our pocketbooks dwindle. Some people spend at Christmas to the detriment of other needs. We think we have to do bigger and better each year and often find ourselves overspent in the process. We have a life of glorious Christmases but no money to retire on.

Tone it down -- for the sake of your pocketbook as well as your soul.

And my last wish is that we share more of what we have. Think of what we spend on ourselves and our family and make an effort to spread more of the wealth around. Decide on a percentage to give to other families or causes. If you can't do it for charity's sake, do it for the tax break. You may even consider using some stock holdings in making donations. You will give away a tax gain and get the value of the stock in a deduction for this year's taxes. It's a great way to donate.

That's my Christmas wish list for this year. And as with all wish lists, some things I'll get and others I won't. Oh yeah, there's on more wish... Peace on earth and goodwill to all people on earth.

--Nancy Lottridge Anderson, Mississippi Business Journal, December 2, 1996