First Person: I'm Going Credit Card Free This Christmas

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After years of paying monthly payments on my credit card, my husband and I used a portion of our 2011 tax refund to pay it in full. Now that we paid my card off, we are working toward paying his off as well. Our plan is to have zero balances on both cards by March 2013, which means we can't charge any of our Christmas shopping this year. This is how we plan to complete our Christmas shopping list without using our credit cards.

Saving throughout the year

Over the years I've often found myself struggling to buy gifts for all of my loved ones because I didn't plan ahead. After repeating that cycle again last year, I decided to start saving money especially for Christmas. I've never saved at the expense of taking money from something else because I knew a dollar here and there would add up quickly. Over the last 11 months, I managed to save $300 dollars, which will help us avoid using our credit cards to pay for gifts this year.

Layaway plans

One of the best things about paying with a credit card is that you can pay it back a little at a time; however, that comes with a steep price in the form of interest charges. For example, my credit card company charges me 22.9% interest on my balance each month. Luckily, I've found that stores offer layaway plans with the same paying convenience, but most are completely free. This year I've put $175 worth of items on layaway, and will pay a little each week for seven weeks until its paid in full. The best part is that layaway is free so it will not cost me any extra.

Stick to my budget

As much as I want to give everyone a high-end item that will knock their socks off, I know I can't possibly afford to. Instead, I have to focus on getting gifts in my price range that I know they will love. My husband and I have sat down and determined how much of our money will go toward each person on our list, and we will not spend over that limit. I keep our finances on a strict budget, so it only makes sense to follow a budget when Christmas shopping as well.

While I want to give my loved ones great gifts, I refuse to go deeper in debt to pay for them. I'm confident that using our holiday savings, following our budget, and using other payment methods that are available will allow is to have a stress and debt free Christmas.

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