12 Days of Christmas Money Mistakes

Here’s a different version of the popular Twelve Days of Christmas song. In this case the true love has some very bad money habits.

Dec 16, 2016

On the first day of Christmas, my true love gave to me …

A charge card in a fake tree.

… and so forth until day twelve when …

On the twelfth day of Christmas, my true love gave to me …

Twelve months of payments

Eleven budget no-shows

Ten prior bills due

Ninety days no paying

Eight checking boo-boos

Seven days a spending

Six days of savings

Five payday loans!

Four-0 one k debts

Three quick gigs

Two percent min

And a charge card in a fake tree.

If at the end of the Christmas season you find yourself poorer than Bob Cratchit, there is a good chance your true love gave you one or more of these 12 dubious gifts. You may think these are good ways to ensure you have a carefree holiday experience, but all 12 are worse than your aunt’s fruitcake.

Here’s why:

1. A charge card in a fake tree. Think twice before you act on that special offer to sign up for a retail charge card. Stores would not make these offers if they didn’t know you will end up spending more money. If you save $25 on an intro deal, but end up spending $50 more money than you would have done without the new card, then getting the charge card was a bad deal.

2. Two percent min. If you have a credit card balance, it is tempting to pay the minimum balance which can be as low as 2 percent of balance. The downside of this is that you end up paying interest for much longer, resulting in a higher cost for your purchases. Credit cards are the best value when you pay them off in full each month. 

3. Three quick gigs. Short-term jobs with above-average income sometimes have appeal, but these often come with few or no benefits and limited opportunities for long-term income growth. Sooner rather than later you want to establish a career with a track that will lead to consistent growing income and benefits like health care, retirement, and vacation. 

4. 401(k) debts. Money set aside in your 401(k) is invested to grow so you can have a retirement nest egg. If you borrow against your 401(k) account, your payments back are likely earning you a lower rate of return than the investments that were sold to fund your loan. Plus, if you leave your job, you will take a big tax hit if you don’t pay the loan back quickly. 

5. Five payday loans. Payday loans may be convenient, but you can get better interest rates from a loan shark. You may not notice the cost because $10 here or $20 there may seem like a low price to pay for a fast loan, but do the math and you could be paying up to 500 percent annual interest or more. 

6. Six days of savings. Sadly, many people would be hard-pressed to cover much more than six days of expenses should they lose their jobs. Experts recommend having a six-month emergency fund. That is hard to get all at once, but if you make a habit of paying yourself first by making savings the first thing you budget for, you can, over time, build up a savings account that can handle most emergencies. 

7. Seven days a spending. It’s fun to spend a little bit every day buying lunch and other impulse buys. Deciding not to spend some days by bringing a brown bag lunch or just staying out of stores is an easy way to keep money in your wallet that you can use for more important needs. 

8. Eight checking boo-boos. Most Americans don’t reconcile their checkbooks. It can cost you hundreds of dollars a year in overdraft charges and other fees if you are too lazy to keep track of your transactions. With online banking, reconciling your checkbook is easier than ever. Just think of all the presents you could buy if you weren’t spending your money on fees. 

9. Ninety days no paying. Most people who sign up for 90 days same-as-cash deals do not follow all the fine print rules and get whacked with the entire backdated amount of interest. Skip the gimmick and just buy it the normal way. 

10. Ten prior bills due. Not paying your legitimate debts in order to have money to spend on Christmas stuff is unethical, plus it’s sure to mess up your credit score. 

11. Eleven budget no-shows. Many people start off the new year with a goal to better manage money every month. That works for January and then people go back to their old habits of not doing a budget for the remaining eleven months. Consider attending a Dave Ramsey Financial Peace University course and learn how to make monthly budgeting a habit. 

12. Twelve months of payments. When you buy a car, ask how much — not how much each month. If you focus on a monthly payment, you are likely to spend more than if you focus on the cost of the car. A cheaper car means a lower payment that frees up funds for other needs or allows you to own your car sooner — then you won’t have any payment.

Have a Merry Christmas that will bring with it a new year of plenty instead of an empty wallet.

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