This year, with the economy still on tender footing and sixteen million Americans out of work, and tens of thousands more people considered under-employed, we are facing one of the most challenging holiday seasons in history.
According to leading psychological studies, lack of money is the top cause of family tensions, holiday blues and depression. We also feel tension from the pressure of gift-giving, the perceived or real shortage of time to get things done, and, of course, the stress of dealing with growing credit card debt. While credit card debt has been declining during this year, we anticipate an uptick in credit card usage, especially among people who don't have adequate cash flow from employment but who feel they must buy gifts and celebrate the holidays whether they can afford it or not.
Here are some smart techniques that I recently included in the CACC Money Wise Newsletter that can help you avoid overspending in the next couple of months.
- Decide how much money you can afford to spend (if any), and make it part of your November, December, and January spending plan (budget). Yes, January should be included if you are planning to shop at any Post-holiday events. This is the point where you should seriously consider if you can afford to buy gifts this year. Many people feel an obligation to spend money during the holidays but it simply may be something you cannot and should not do based on your financial circumstances. If you find that you don't have the ability to spend money, we have some alternative suggestions coming up.
- Pay cash, and avoid using your credit cards.
- Make a plan to buy only one present per person. Focus on quality over quantity, even with children. That has actually gotten easier to do each year as electronic toys, games, and computers have become more popular with kids. You can justify fewer gifts because each gift, like a computer, can deliver so much more nowadays.
- Make a shorter list! First of all, make sure you are using a list. Then consider if you are buying on auto-pilot without giving much thought to who is on the list or how much you are spending. When was the last time you reviewed that gift list? There is nothing wrong with paring down your list especially in tougher financial years. If you must keep the list in tact, think of cutting the budgeted amount per person. Yes, you should budget a specific amount to spend for each person on your list!
- Watch for before-holiday sales. It seems the pre-holiday sales start earlier each year and this year is no exception as retail stores are hurting for sales. Many people think waiting to the very last minute will garner the best savings but that is not always the best strategy. Often, to get sales moving, retailers will start the season with a round of big discounts. Also, waiting to the last minute often leads to increased stress and impulse buying which can lead to over spending.
- Make presents. Can you bake or do crafts? Can you write well or take great photographs? Are you musically talented? With today's computer technology, anyone can record music and create CD's. How special would it be if someone wrote and recorded a song just for you? Give needlework, ceramics, framed photographs or other handmade items.
- Donate your time as a present. Again, your talents and time are valuable and they might make a better gift than a store bought sweater. Do new parents need a night off from a new baby? Does an elderly relative or friend need rides to the doctor or help cleaning their house? Can you change oil or do other car maintenance? How about giving golf, swimming, or music lessons as a present?
- Watch postage costs. Prices have gone up since last year. Be sure to mail early to avoid priority postage rates and choose lighter gifts such as gift cards to save money.
- Make homemade cards either by hand or with the computer. Also, avoid expensive fancy wrapping paper. Use bulk postal wrap from the office supply or art supply store. It can be much cheaper and you and the kids can decorate it yourself. As a bonus, it is more environmentally friendly.
- Don't forget to cash in bonus points you accumulated by using credit cards. Many programs offer gift cards at major retailers. Just keep a keen eye out for redemption fees of any kind!Carefully plan and shop at post-holiday sales and be sure the prices you are paying are truly discounts.
Finally, avoid using lower prices at post holiday sales as an excuse to over-shop. Many people buy first and think of something to do with the item later. If you don't have a need right now either personally or as a gift, avoid making the purchase. By the way, it is OK to stock up on cards and wrapping paper for next year if you are getting 60%-80% discounts and can afford the purchase.
Happy Holidays...
Mike
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