Jingle Bells, Jingle Bells, bills are on their way

Oh what fun it is to pay for stuff bought yesterday!

Does that tune sound familiar to you (beyond the obvious holiday association)? Have you ever been caught in the spirit of "giving" and spent too much only to be overwhelmed with bills after the New Year? Chances are for most of us the answer is yes. And so it seems that the topic of spending responsibly might be of interest.

Paying today, tomorrow and the day after tomorrow for what has been used up, consumed, and in many cases forgotten, has consequences. Here are just some of them:  

• Debt takes dollars away from current consumption. In other words having to pay monthly credit card debt takes money away from investing for retirement, building a business, health care for you and your children, education, etc.
• Your ability to obtain a mortgage or loan at a favorable rate might be adversely affected.
• If you have a high level of credit card debt, you might find that your credit rating has been lowered, even though you pay your bills on time. The quality of your credit rating (your credit score) can have tremendous impact on your life.
• The cost of the original purchase skyrockets over time as you pay a small portion toward principal along with interest each month.
• Worries about finances might affect your physical and mental well being, cause stress and anguish in your relationships and life.

Ask yourself these 3 simple questions prior to putting your credit card through the machine, regardless of the occasion.

• Is this purchase really necessary and appropriate for me?
• How long will I have to work to earn the amount of money the item costs?
• Is there enough value in this purchase to justify the amount of work I will have to give to get this item?

Be honest with yourself when answering these questions, even though you might not like your own answers. Now make your buying decision. Make it a habit to ask these questions of you when out shopping.

Since we are approaching the holidays (at least in this part of the globe) here are 3 more simple suggestions to help you shop and spend responsibly.

• Have a holiday gift list and stick to it. Think ahead of how many dollars you can and want to allocate to gift giving.
• Shop ahead of the actual holiday. Don't get caught in the last minute buying frenzy that leaves no selection or choices, even though you might find some bargains. When we feel hurried and stressed, we are less likely to stick to our plan and are more apt to buy on impulse. 
• If you are having problems with managing your credit card balances - PAY CASH for any purchases or DON'T BUY IT. Keep track of your cash purchases and commit to stick to your plan.

Happy and responsible shopping!  

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©2004 Johanna Hofmann, MBA has been passionately interested in financial education for many years. She is currently providing financial education to women at all levels of exposure, experience and interest. She can be reached at Johanna@FinanciallyFreeWomen.com.