xmas colored shirts


13% Haven’t Paid Off Christmas 2011

Consumer Reports says 13 percent of Americans are still paying off credit cards that they ran up to buy 2011’s holiday gifts.

That may be one reason more Americans plan to budget this holiday season – 52 percent – compared with last year’s 41 percent, according to Consumer Reports’ national survey. Among those who bought their 2011 gifts with credit cards, 58 percent paid them off by the end of January and another 13 percent in February – hats off to them. But the rest waited. Some are still waiting.

I can relate.

In the interest of encouraging Squared Away readers to reveal their financial failings in the comments area below, here’s one of mine: a credit card balance averaging $2,500 for more than 20 years. It’s embarrassing, and yes, this personal finance blogger knows why it’s important to pay off a credit card charging nearly 15 percent interest – what a waste of a few thousand dollars I could’ve put in my 401(k), for instance.

During the Christmas and Hanukkah doorbusters season, we are all even more vulnerable to the impulse buys that can swamp us, making the New Year, well, not so happy.

“We have a mental ideal about what Christmas is,” said David Robinson, owner of Robinson Financial Associates in Portland, Maine. When giving to friends and family, he said, “you want them to like the gift, and you want them to feel good, and you want everyone to have a good Christmas.”

Back to my credit card problem. I started using credit to supplement my $18,000 salary in my first job. Later, I spent money on furniture – anybody want to buy a floral floor rug? – a few medical bills, cool trips, and lots of holiday gifts. One time, the card balance spiked to around $8,000. That was scary. I hammered it down to the $1,000 range, but it crept back up to $3,000 – more trips, probably, but who knows? This month, I finally paid off that lingering card. Whew!

This history, however, does not explain why I held the balance, especially in recent years when I’ve had enough in my bank account to pay it off. But didn’t. I confess: I wanted to hold on to my cash. And I wanted my savings account to appear larger than it really was.

Of course, this makes no sense. Why do you think economists call debt “dissaving?” But emotions and money are a volatile mix: having a bigger bank account somehow made me feel safer – more prepared for emergencies perhaps.

I have embarrassed myself before you, reader, to make a simple point: everyone – rich or poor, young or old, personal finance blogger or not – has unclaimed emotions about their money. When I was running up the card, I rationalized that I would pay it off within the year. One year spilled into the next, and it’s not like $30, $50, $100 a month in interest was an unbearable hardship. I was just irrational – and stupid, financially.

In the spirit of the holidays, will you share your financial failing – and how you conquered it?

7 Responses to 13% Haven’t Paid Off Christmas 2011

  1. Neil Rhein says:

    I give you credit (minus the interest charges) for confessing your financial sins so publicly. As you make clear, emotions, rather than logic, often lead people to make bad financial decisions. I hope now that you have paid it off you will avoid running up credit card debt again. Don’t let all the hype about holiday shopping suck you in!

  2. Gayle says:

    What I’d like to know is: is that a learned thing? Spending more that you have? You are certainly of another generation as most in my generation never spent more that we could afford to pay off.

  3. Elin Zander says:

    Wow! I have never understood why people run up credit card bills that they cannot pay. But I have to confess to the opposite problem. I am a money hoarder; I hate to spend! I do OK buying Christmas gifts, but I won’t spend on myself. So very few vacations or trips or fun stuff. There has to be a happy, healthy medium out there.

  4. Neil nailed it. I totally agree with him.

  5. Sheila says:

    Yes, the inability to spend is a bit embarrassing too. I have this challenge, but manage to overcome it by thinking about death…it does happens, and sometimes unexpectedly. I get myself over the spending challenge by reminding myself how sad it would be to die with rainy day savings-in-waiting. Start small and think about others in the economy who benefit from your spending. It gets easier.

  6. Madrid says:

    It is difficult to imagine how it could have happened. Just think of what you can afford, compare prices, and spend wisely and you will be able to get small luxuries, have fun, and save!

  7. Yes, I am totally agreed with that. Credit Cards play an important role in generating the speed of sales. Nice post.