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Haunted by Christmas past?

Why should you worry about next Christmas in January? Because, if you are like a majority of Americans, you're getting a ghastly reminder of last year's festivities right about now.

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The Ghost of Christmas Past appears in your mailbox around mid-January, wrapped in credit card bills, chained to an empty safe representing your depleted bank account. He can make the first few months of the year dreary with money concerns and busted budgets.

If this is happening to you -- fear not. Unlike Scrooge, you are not alone in this haunting. While folks often make a point of saving up a down payment for a car or for their kids' education, few plan ahead for their annual holiday spending. But it takes an expensive bite out of consumers' wallets.

The average American spent $835 on Christmas this year, according to the annual holiday spending survey by Myvesta.org, a nonprofit consumer education organization. That's up from $722 in the 2002 Christmas season.

Since most people don't plan on the expense of their giving, those holiday costs were racked up on credit cards. Now many Americans are receiving those holiday bills.

To make matters worse, the Ghost of Christmas Past demands finance charges to keep him alive and kicking well into the new year. One in five Americans will live with this ghoulish reminder of impulse purchases, last-minute mall runs and overindulged online buying all the way to Independence Day. At least Scrooge's nightmare only lasted one night.

Instead of letting the Ghost of Christmas Past make your new year miserable, make friends with the Ghost of Christmas Yet to Come. This helpful ghost is all about planning ahead -- saving up for those holiday expenses, making lists and checking them twice, and paying cash to play all those reindeer games.

While January heralds the arrival of holiday bills, it's also a traditional time for a fresh start. This year can be the year you plan on enjoying the holidays like a kid again -- without money worries.

How to reduce your debt

Here are a few tips to reduce holiday debt as soon as possible:

  • Commit to managing your money every week, not just once in a while.
  • Cut back on day-to-day spending.
  • Find a lower-interest credit card. (Bankrate's credit card search engine is a great place to start.)
  • Find ways to bring in extra income, whether it's a part-time job or a garage sale to get rid of items that are other ugly reminders of Christmases Past.
  • Stop using your credit cards until they are paid off, and then charge only what you can pay off the next month.

How to avoid future debt

Licking that old, gray Ghost of Christmas Past is only half the battle. The other half is planning ahead with the Ghost of Christmas Yet to Come:

  • Commit yourself to finding ways to accumulate and save money.
  • Start a Christmas savings account now, and contribute to it regularly for the next holiday season.
  • Plan your shopping ahead of time. Think like Santa: Make your list, check it twice and stick to it. This will save you money and time -- both of which are valuable commodities during the holidays.

The Ghost of Christmas Past and the Ghost of Christmas Yet to Come are counterbalances to each other. With the bills of last Christmas, the credit card interest accrues, giving you and other Americans an increasing cash crunch with each passing month. Saving for future holidays puts that interest money in your account and provides you with a wee bit more for your gift shopping. The choice is yours whether to keep giving to the Ghost of Christmas Past ... or receive a little gift next fall from the Ghost of Christmas Yet to Come.

Admittedly, things could be tight this year when you are saving for next year's Christmas while still paying for this year's Christmas. If you need to scale back this year's holiday spending to meet both of these goals, you won't have to be a Scrooge -- just creative.

Just remember that you'll be enjoying a debt-free Christmas the next holiday season and beyond. That is the best Christmas present you can give yourself and your family.

Bankrate.com's corrections policy
-- Updated: Dec. 30, 2003
 
 
More stories by Cynthia Brodrick
 
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