This year I decided not to put any money on my credit cards for the holidays. Every year since I was 18 I have always put a few hundred dollars on my credit cards, and then paid them off right after Christmas. I usually carried the balance for a month, and had it paid down by the end of the second month.

This year though, is going to be different. I am not using one penny of credit.

It’s funny, but the reason I am not going to use credit this Christmas has everything to do with what I learned by writing for this website. I now know that there are two types of people as far as credit is concerned. Those who carry a balance, and those who don’t.

In other words, there are people who use credit cards for the benefits they offer when you don’t carry a balance, and there are people who are used by their credit cards and get trapped in the cycle of revolving debt.

So, while it might be strange to promote a credit free Christmas on a credit card blog, that is exactly what I am doing! Because when it comes down to it, if I can’t use my credit cards properly, I don’t want to use them at all. When I sat down, and thought about it there are tons of reasons for me to refrain from using my credit cards this holiday season.

1) I am two years out of a bankruptcy, and I want to buy a house in another two years - This means that I am going to have to have a flawless credit history when I put in that home loan application. I don’t want to carry a balance at all over the next two years, and I’ve only carried a balance on my credit cards twice since my bankruptcy. On time payments, and no revolving debt are the strongest weapons in my arsenal as I work to raise my credit score.

I have learned that you can recover from a bankruptcy if you are willing to change the attitudes and habits that led to the bankruptcy. That is my first priority right now.

2) I don’t own any rewards credit cards- My credit score is not high enough yet for me to qualify for a rewards credit card. As soon as I can qualify, I fully expect to start using my rewards card for everyday purchases and then pay them off in full each month. Many rewards credit cards are the equivalent of getting 1% to 5% off of everything – either in cash back or travel rewards. In my opinion, thats too good a deal to pass up – but I have to be in the habit of not carrying a balance first. Otherwise, the rewards I earn will pale in comparison to the interest I will be charged.

3) I’ve really gotten into a frugal mindset this year - I am tired of playing the “gift game” with my friends and family. Many of the people in my family earn considerably more than I do – but that does not mean that my Christmas gifts have to equal theirs monetarily. I have a large number of people that I buy presents for each Christmas. It’s very easy to overshoot my budget and end up broke, or in-debt after the holidays. Especially if I am trying to match my presents to someone else’s income level!

4) I’ve discovered the clearance section - I never really considered buying the majority of my Christmas presents from the clearance sections in stores. This year I did. I found many things at deep discounts that I was able to buy for my friends and family. I took the extra time to look around and find things that I believe my family will love – I just took care of myself while I did that by buying at a discount.

5) I am planning to move in February - I am two years away from buying a home, and I don’t want to live where I am while I prepare for that. That means that in February I am going to have to have a security deposit on a new place, as well as the first and last month’s rent. If I am carrying credit card debt from the holidays I will either have to pay off those credit cards, or be charged a few months worth of interest and have my credit score take a slight hit. Not worth it to me!

So, those are my reasons for not using my credit cards this Christmas. By next year I hope to be able to have a couple of rewards cards so that I can get cash back on my Christmas purchases. Right now though, I know I am doing what is best for my situation. There is no logical reason for me to put anything on a credit card this Christmas. All of the reasons I might want to charge things are purely emotional (to buy more or better gifts for family and friends, etc.) For this year at least, I am going to let my logic win out, and do the very best I can by my family, and my finances.

How about you? How are you handling the issue of credit and Christmas? Will you tell me about it in the comments below?

Have a question for us? Leave a comment below!

Keep Reading:

• Credit After Bankruptcy – How to Get Credit and Manage New Credit Accounts
• The FICO® Score Breakdown
• Bankruptcy Recovery: Lessons Learned

This entry was posted on Wednesday, December 17th, 2008 at 15:57 and is filed under Debt Reduction FAQ. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.