If you’re willing to go in to debt, you can buy bigger, better Christmas presents for the people you love. That’s good for everybody, right?

Wrong.

We’re in the thick of the holiday shopping season now, and you’re probably becoming keenly aware of what you can and can’t afford to buy with the balance in your bank account. There is no shortage of ways to “extend” your buying power, though, and they all involve some kind of credit.

It can be tempting to buy big gifts and charge them to your personal credit card, or to open special store cards in order to get some kind of savings on an item that you can’t afford to pay cash for. But these are terrible ideas.

There’s no such thing as good debt — not even for Christmas presents — and borrowing money for the holidays is only going to make your financial problems worse.

What’s so bad about borrowing a little bit of money to have a merry Christmas? Well, it creates all sorts of problems, both in the present and the  future.

Here are four reasons why borrowing money for Christmas is a really bad idea.

1) Borrowing makes Christmas more expensive.

It may seem like using credit can extend your buying power this holiday season, but that’s just an illusion. Borrowing actually decreases buying power, and it’s going to make your gift giving this year unnecessarily expensive.

This will happen in two ways. The first is fairly obvious: When you borrow money, you’re going to spend more on the gifts you buy than you would if you limited yourself to cash on hand. The holidays get more expensive because you buy more expensive gifts.

The second way is where things really get bad: When you borrow money, you have to pay your loans back with interest. That means that you end up paying more than just the purchase price of the items you bought with credit. The higher the interest rate, and the longer you take to pay off the loans, the more you’ll end up paying in interest.

2) Borrowing creates bad habits and expectations.

If you borrow money to buy Christmas gifts this year, you’re setting the stage for unfavorable habits, behaviors and expectations in the years to come.

When you use credit to finance your holiday celebration this year, that creates a dependence in your mind, and makes you more likely to depend on credit for next Christmas as well. The more you feed this cycle, the more firmly entrenched in debt you become.

Borrowing to buy big gifts also sets bad precedents and unrealistic expectations. If you give your kids expensive gifts this year, they’re going to expect a similar level of spending next year, and the year after that. Soon, you’ll be trapped not only by debt, but by your kids’ expectations.

Finally, borrowing money to pay for Christmas models really bad financial behavior for your children. By and large, your kids are going to grow up and do what they see you doing now. So if they learn to use debt to pay for gifts, they’re going to repeat the cycle with their families. The decisions that you make now can echo in your family for generations.

3) Borrowing puts you in the hole for next year.

Giving expensive gifts on borrowed money can be lots of fun in December. But when January rolls around, and you get the bills for all of those gifts, you’re probably going to be much less merry.

The beginning of a new year is always a great time to re-evaluate your financial plans and double down on efforts to get out of debt, save for emergencies, invest for the future or give to good causes. But if you borrow money to pay for the holidays, you’re going to have to spend the first months of 2014 paying back the money that you borrowed.

Borrowing to buy gifts now leaves you in a hole at the beginning of next year, and this can strip you of your momentum. If you want to make big strides in your financial life next year, the first thing you should do is to avoid borrowing money during this holiday season.

4) Borrowing steals some of the joy from your giving.

If you use debt to buy expensive Christmas gifts, your kids or other loved ones are going to be really thrilled when they open their gifts. And while there’s some measure of joy in watching their faces light up, that joy is going to be mitigated by the burden of debt on your heart and mind.

In truth, most of us know that borrowing money isn’t a good idea, and we feel guilty about using credit to fund Christmas. We also know that the happiness of gift giving is only temporary when you have to turn around and pay the bill for expensive toys that you’ve bought.

So while you’re watching your kids enjoy their new gifts, there will be a part of your heart and mind that is too burdened by debt, worry and guilt to truly rejoice. Borrowing steals some of the joy from giving and turns Christmas into a guilty, angst-ridden holiday.

No matter how you think about it, borrowing money makes Christmas less merry for everyone. Do yourself and  your family a favor, and celebrate Christmas with cash.

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Photo by Jimmie. Used under Creative Commons License.