Beware the Spirit of Christmas

Al Jacobs

With Thanksgiving now a fading memory, Christmas, in all its splendor, is now upon us. We approach no other holiday with such anticipation. However, embodied with the promises of gladness and fulfillment are temptations which can’t be ignored.

Thanks to influence exerted from many areas, the season evolved into a passion to spend. For those families already heavily in debt with precious few spare dollars on hand, the last thing needed is an inducement to dissipate whatever’s left. And yet, thanks to the efforts of a formidable marketing industry, this is exactly what many persons are persuaded to do.

This tendency to spend beyond your means is a somewhat recent development. In an earlier time, under the influence of the traditional Christian ethic, virtue assumed a divine quality. Among these principles was thrift, honored for its own sake. I recall a popular tale about the wife of a man of extremely modest means whose food shopping consisted of selecting the lowest priced items from numerous markets. Naturally she walked from store to store, or perhaps “trudged,” to add a touch of pathos. In any event, the story served its purpose. It illustrated a frugality next to godliness, with no limit to the exaltation experienced in such behavior.

You must understand, of course, society’s habit of prudence developed before the advent of such devices as credit cards and home equity lines of credit. Most buyers made their purchases using checks written on accounts with actual funds on deposit, or with hard, cold cash. The closest most of us ever came to financing an acquisition might have been from a neighborhood furniture dealer who permitted three or four equal monthly installment payments for a household item.

The idea of going into long-term hock for anything other than a home mortgage, or possibly an automobile, seemed unthinkable. The money we earned actually went to acquire things we wanted, with no portion diverted to a lender as interest. Of equal importance, we didn’t live particularly high on the hog; we only purchased affordable things. Although by today’s standards it may seem we deprived ourselves in some way, I can’t recall ever feeling distressed because of my lack of something. In general, life without an abundance of physical possessions can be just as enjoyable as having all the things you can imagine, for personal contentment depends more upon what you value than what you possess.

Quite clearly things are radically different. A surprising report reveals over half a group surveyed refuses to pick up a penny on the ground. Speaking for myself, I’ll never pass one by. Perhaps it relates to my recollections as a teen-aged bowling alley pin setter earning a dime a line. A penny represents resetting of ten wooden pins and returning two 16-pound balls. To this day a cent signifies a reward for services rendered.

Are my experiences unique? It’s hard to say whether this attitude is generational or individual. Regardless, I realize I’m no longer in the majority. The vast bulk of my fellow Americans seem willing to spend money they don’t possess.

Inasmuch as I’ve described how we subsisted in a prehistoric era, I’d like to suggest its application to this Christmas season. For those of you who harbor any sense of financial discomfort, or for whom the prospect of uncontrolled holiday expenses is less than welcome, I’ll offer a suggestion. You might borrow from the scenario I just described and, with the cooperation of your family and significant others, relegate the season to a single number. Specifically, you’ll not decide on the presents you want to give or the festivities to be engaged in, but rather the total number of dollars you’re willing to spend. You’ll then set this sum aside, in cash, in a separate location, and from this aggregation all yuletide expenses will be funded – and by all, I mean all.

Whether it’s the Christmas tree you mount and decorate, the cards you send to friends and relatives, the presents for loved ones, or the family feast consumed on December 25th, every dime in payment must come from that single stash of cash. There’ll be no credit card borrowing, no salary advances and no withdrawals from a savings account. This will be an exercise in budgeting at its most basic level, for if the cash isn’t there, the expense can’t be incurred. The key, of course, will be priority. The expense of each item you select must be weighed against its relative value compared with other items you desire. Is the bicycle you want for your son more important than the wristwatch for your spouse?

It may seem unfair you must consider such things at this festive season, but in the final analysis, this is what the world of money is really all about. If you decide to follow my Christmas plan, you realistically enter the financial world where you control your finances.

I must warn you there are powerful forces that’ll do what they can to subvert your best intentions. The marketers are already underway with their advertising blitz, assuring you whatever you faintly desire is yours by entitlement. The institutional guilt trip is in full swing. As for payment, no need to worry: There’ll be no installments due until next year. Why should the cost for such borrowing justify denying yourself and your loved ones the things they deserve? Umm, and what’s the cost? The details are buried somewhere in the fine print of your credit documents.

If you finance your purchases with the Chase Bank credit card I hold, your annual percentage rate will be 16.24%. If it’s a cash advance you need, the rate rises to 23.24%. You may be certain the cost of your borrowing will be comparable. And if, God forbid, you’re late with a payment, you’ll be hit with what’s known as the default interest rate: 29.99 percent. If these numbers aren’t upsetting, then you’re living on a different planet than I am.

And so I’ll conclude my recommendations for the holidays as we fast-forward to January of next year. If you succeeded in holding spending to the cash set aside, you’ll note there are no year-after bills to be paid. What better post-Christmas gift might you have possibly given yourself? And with this realization, I’d like to leave you with an afterthought. If December can come and go, leaving in its wake a sense of financial relief, why not consider extending that philosophy to the other eleven months of the year?

What I’m suggesting is you take control of your life by truly living within your income. Purchases will be with funds you actually hold, and personal borrowing becomes a thing of the past. Admittedly your creditors will lose you as a customer, but perhaps it’s a burden you’re willing to bear.

Al Jacobs, a professional investor for nearly a half-century, distributes a monthly newsletter in which he shares his financial knowledge and experience. You may view it on



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