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Before the Thanksgiving turkey was roasted, the potatoes mashed, and the dishes washed and put away, Americans were being encouraged to spend, and to spend big for the holidays.
“The holidays can add real stress to already tight budgets,” State Treasurer Jack Markell said. “Consumers are encouraged not only to splurge for the holidays, but they also increasingly receive offers of quick cash to make purchases they couldn’t otherwise afford.
“Our office has already received reports of encouragement of high-interest payday loans, solicitations to refinance your home for extra holiday money and other offers that provide quick cash fixes. More often than not, these offers come with steep interest rates attached and can leave you paying for this year’s holiday far into the future.”
According to the National Retail Foundation, Americans are projected to spend $429.5 billion this year on holiday purchases, - a 6 percent increase over last year’s spending. Thirty percent of 2004’s holiday purchases were by credit card, 34 percent by debit / check cards, 26 percent cash, and 10 percent by check.
“Planning a holiday budget isn’t the most enjoyable part of many people’s holiday festivities,” Markell stated. “But by planning ahead, you can stick to your budget and not begin 2006 with a financial hangover.”
The following are some tips that Markell offers for financially-healthy holiday spending:
• Don’t borrow for the holiday. Quick cash offers are just that - quick cash for today. You have to pay it back and there are usually steep interest rates and in some instances service charges attached to them. Spending more money than you earn is always a bad thing.
• Have a plan. Budget the total amount of money that you can realistically afford to spend on the entire holiday.
• Make a list and stick to it. Make a list of everyone that you plan to buy for and dollar amounts that you’ve budgeted to spend. Don’t deviate from this list. Once off the path, it’s easy to get lost in the woods.
• Visit the mall at less crowded times. Shop early in the day and week to help giving in to pressure purchases. Try to avoid the mob-scenes on weekends, especially in the few remaining weeks before the holiday.
• Enjoy the process. When pressed for time or stressed it’s easy to overspend just to “get it done”. Shopping leisurely allows for comparison shopping, picking out special gifts, and resisting the temptation to overspend that usually accompanies a last-minute rush.
• Comparison shop for everything on your list. Check sale flyers in newspapers and research online for the best prices for gifts on your list before you head to the mall to save not only time, but also money. If you enjoy shopping online, there are multiple websites that not only do the comparison shopping for you, but also tally shipping.
• Watch for free-shipping from your favorite online stores. Many online retailers have very competitive prices for wide ranges of gifts and also free shipping to a single address when you spend a certain amount – in some instances as little as $25.
• Track daily spending. Keep a running total of all purchases. If you overspend in one area, deduct that from another area that you planned to spend money on. Don’t allow one misstep to throw your entire holiday budget off track.
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