5 Christmas Spending Traps to Avoid
Don't let overspending put a damper on your new year.
December is officially upon us and the Thanksgiving turkey leftovers are almost gone. That means the holiday shopping season is now in high gear, with marketers and advertisers bombarding us from every direction with deals, coupons, hot items and zero percent interest offers. But right now, before you grab the car keys and head to the mall, or log on to your favorite online store, take a deep breath, think about your financial goals, and be aware of these 5 holiday spending traps.
1. Watch out for coupons and special offers. These are designed to play on your emotions, to get them running in high gear, and trap you into the purchase. Many of these offers try to convince you that you'll never find this price again as long as you live, but that is almost never true. Coupons also often result in expenditures you wouldn't have made in the first place. If you never intended to buy that new TV, you didn't save any money by getting in on sale.
2. Don't buy Christmas. Celebrate it! The media bombardment will try to convince you that Christmas is all about going to the mall and spending money like the world's coming to an end. But don't forget to celebrate the season in other ways. Make memories with your family and loved ones by driving around your hometown looking at holiday lights, baking Christmas cookies, going ice skating or getting photos with Santa. You could even book a ski trip. Yes, that costs money, but the memories made will be priceless.
3.Stay away from company credit cards! Stores are always pushing their credit cards on customers, and it gets even worse during the holidays. Don't fall for it! That 10 percent off now won't help you when you've overspent, or your credit score takes a hit, or the interest rate skyrockets to 25 percent after the introductory period. Simply decline and make the purchase as you had originally intended.
4. Don't try to keep up with the Joneses. Just because the neighbor's kids have every single hot toy available doesn't mean your children need them too. No, you don't need a car with a big red bow on the top just because you saw one in your friend's driveway. Your sister-in-law might have gotten a sparkly new diamond necklace. You don't need a bigger one. Remind yourself of your long-term financial and savings goals and don't worry about what other people are buying.
5. Buy wrapper paper and gift bags after Christmas. If you buy someone a $20 bottle of wine and spend $5 on the gift bag and tissue paper, you've increased the price of the gift by 25 percent. Instead, stock up on paper, bows and gift bags after Christmas, when they're often marked down by 80 percent or more, and use them next year.
And while this should go without saying, I'm going to wrap up by saying it anyway: do not go into debt when shopping for Christmas gifts. Even if you can pay off the balances in a few months, that eats into your savings goals and hurts your future financial life.
As always, if you need help setting your budget or determining exactly how much you can afford to spend on your family and friends, give us a call. We can crunch some numbers with you and help you stay on track.