Pricey December And Some Thoughts On December Debt Sentence

December has always been at the top of our “most expensive month of the year” category. Every year, the spending frenzy starts around the Thanksgiving holidays and doesn’t end till early January. We swipe our cards at outrageous frequencies, for a multitude of reasons, till they almost wear out and we keep on piling up the balances. This happens in spite of my disdain towards concepts like “black friday” and “cyber monday”. It happens in spite of our best attempts to maintain a frugal approach towards things (ok, I admit December is a bit more “non-frugal” than other months). This time it was expensive car repairs, extremely long drives and out of town stays; last December it was extremely long flights and lot of gifts…point is, stuff always happens in this month for us.

This December, we swiped our credit cards for an awesome 81 number of times! That’s almost 2.61 times a day, every day for 31 days!. This swipe-o-rama resulted in couple of rare emails from Yodlee like this:

…And gut-wrenching (considering our student status :)) things like this part of our bank statement… which shows the payments we made to clear our December mess :

Of the cards listed above, we are making use of 0% balance transfer offers on three cards. The rest, including all the cards showing three digit figures, were used for purchases.

But hey, that “ouch” bank statement is in fact the best part of it. We paid off all our December expenses immediately after the end of the month. We had anticipated the increase in the expenses and made some requisite provisions; that made paying off a bit easier. We also had to dig into our reserves (..that was a bit tough), but starting of the new year with no credit card balances (well except the 0% balance transfers that are earning 5.05% APY in HSBC) felt really good and light.

Some Thoughts on December Debt Sentence

In between the holidays, cool weather,”Happy Thanksgiving”, “Black Friday”, “Cyber Monday”, “Merry Christmas”, and the generally festive atmosphere, most of us end up spending a lot more money than usual. According to this website, US consumers are forecasted to spend almost $428 billion on retail and food purchases in December this year. Americans also spent $23 billion on online purchases between Nov.1 and Dec. 26, according to CNNMoney.com. That means millions of consumers will share a temporary debt of hundreds of billions of dollars between them. A lot of these consumers will charge thousands on their credit cards and the huge balances will make many of them will think “May be I could carry some of this balance over…and pay it over time later”. If you are thinking along the same lines, consider yourselves warned: you may be sentenced to debt (it’s funny how debt rhymes with death) for a long time to come.

I made that mistake in my foolish years and repented it for a quite a few years. Once you get in that habit of “What’s the hurry, I will pay it later..”, it’s very difficult to come out of the complacency. You will keep making minimum payments just because it’s convenient and keep piling up the balance. With increasing balance it takes increasing efforts to wipe it off entirely and that encourages the tendency of pushing repaying even further into the future. The situation can get very depressing very soon. I am deliberately not stressing on the foolishness-of-buying-things-when-you-don’t-need rant. It doesn’t matter whether you spent wisely, or foolishly, or whether you were forced to spend on things you didn’t want……just pay off whatever you charged on your credit cards. Don’t let credit card balances chase you through the rest of the year.