Black Friday: Ready or Not, Here It Comes!

According to all of the ads on TV, Thanksgiving is no longer a holiday. It is now Black Friday Eve.  It has simply become the mark of the beginning of Christmas shopping season. If you are a big Black Friday fan and prefer to get your shopping done early, you might be okay with this.  But for me, all the hub-bub about Black Friday seems silly. Is anyone really saving that much money? Are the deals on toys, electronics, and clothes really worth getting up at 2 am and foraging your way through the crowds for? I have never been shopping on Black Friday and ever since I read a terribly sad article about a part-time worker at a Long Island Wal-Mart who was trampled to death by Black Friday shoppers back in 2008, I know I probably never will.

Despite the heavy advertising for the event, it seems that more and more Americans are on the same page.  A survey done buy NerdWallet.com revealed that only 12% of consumers will be doing the majority of their shopping on Black Friday this year.  Apparently most of us have decided we would rather enjoy our turkey in the company our families on Thanksgiving instead of gearing up for a shopping spree.

But there is an upside to early shopping.  The National Retail Federation says that Black Friday shoppers spend an average of $300 with about 30% savings. If you’re willing to put in the effort, Black Friday deals could really help you keep your holiday budget in check. So here are 3 important things to keep in mind if you will be braving the crowds next week:

1. PLAN AHEAD – Black Friday can get crazy.  Shopping on this day is not for the weak of heart. You need a battle plan.  Check ads in your local paper before hand and use websites like TGIBlackFriday.com and RetailMeNot.com to find out where the best deals are for the items on your list.  Those websites even provide mobile apps to help you navigate stores while you are on the move.  Make a plan ahead of time for what stores you will visit, what items you are purchasing, and a timeline of where you will go and when.  This will help you keep your cool in the stampede of shoppers and avoid unnecessary, impulse buys.

2. FOCUS ON ELECTRONICS – Forbes.com claims that the best deals on Black Friday are always for electronics.  Unlike toys and jewelry who’s prices tend to drop 2 weeks before Christmas, things like TVs, gaming consoles, and smart phones tend to be at their lowest price on Black Friday.  So if you have any digital gadgets on your shopping list, Black Friday is the day to get them.

3. FOLLOW THE 40% RULE – This shopping strategy can help you make sure you are actually getting items at a bargain price.  If an item is not 40% off or more, it’s not worth your time; it will probably be available somewhere else for less.  So if it’s not at least 40% off, don’t put it in your cart! The only exception to this rule? Stores that don’t typically have sales.  Some retailers are always discounting items (think Kohl’s or Walmart). But others, like Ray-Ban, Prada, or Patagonia, hardly ever discount merchandise.  If these retailers are advertising discounts on Black Friday take them, even if it’s not a full 40% off! Chances are you won’t see that bargain price again.

One important thing to know before you rush out in your pajamas in the early hours of the 29th – 70% of Black Friday door-busters are available online, according to Forbes.com.  This means you could stay home and get the same prices on your laptop that you would elbowing your way through the mobs in store. It’s definitely something to consider before you hit the road to shop.

With that in mind, here are 3 Cyber Monday Tips:

1. SHOP SECURE HTTPS:// – Only use familiar, well-known websites while online shopping.  Legitimate sites will have https:// (the “s” is for secure) in the URL. If the business doesn’t have a phone number or physical address listed on the site, it might not be a real business.  Scammers will create dummy websites and fake online ads, often promoting discounts on popular items, to trick shoppers into giving them account information, credit card numbers, and other personal info.  Be wary of any e-mails or online ads from unknown retailers that promote huge discounts on merchandise.  If the price sounds too good to be true, it probably is.

2. REVIEW IT – When using a marketplace style website (sites that use multiple vendors like Amazon, E-bay, or Etsy) check the customer reviews before buying a product.  Buyers often rate the quality of the item they purchased, how quickly it was shipped, what shape it was in, how easy the vendor was to deal with, etc.  If the vendor seems trusted and reliable, go ahead and buy the item.  If the reviews are bad, chances are something will go wrong, so avoid those items no matter how big of a discount they’re offering.

3. KNOW THE RETURN POLICY – Before buying, check the website’s return policy. You want to know what your options are if the item doesn’t get to you on time, gets damaged during shipping, or the recipient doesn’t like it.  If it can’t be returned, you’ll want to know that before you pay.

Happy Thanksgiving and Best of Luck to all Black Friday Shoppers!

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Short & Sweet Credit Card Advice

Want to know the single best piece of financial advice I’ve ever been given?

If you wouldn’t go to a bank or credit union and ask for a loan to buy it, DON’T put it on your credit card.

creditcards

I got this tip way back at the beginning of my financial career (like 2 years ago) at a Financial Literacy Conference.  It came from Dr. Barbara O’Neill a member of the New Jersey Coalition for Financial Education. She’s a very smart lady.

The trouble with credit cards is, they don’t feel like real money. It’s not cash you have to hand to the cashier.  It’s not a debit card that affects your checking account balance right away.  It’s so easy to impulse buy or overshop with a credit card because payment is delayed.  And all of the sudden 1 or 2 small purchases turn into 20 and it all adds up to a big balance.  Worst of all, since you haven’t depleted your checking account or the cash in your wallet, you probably feel like you still have money to spend even though you’ve already burned through your monthly budget.

Another problem with credit cards? Interest rates are crazy high (average in the U.S. is 14.95% APR according to CreditCard.com). Why would you want to pay 14% interest on a purchase you could have paid for at 0% interest with cash or a debit card? You wouldn’t! You’re paying more for items in the long run just to delay payment for a few weeks or months. I’m sure you’ve been told before to pay-off your credit card balance in full every month, but how many of us actually do that? According to NerdWallet.com the average U.S. household in 2013 has $7,050 in credit card debt, which makes me think not too many of us are good at ante-ing up each month to pay off our credit card balance.

If you follow Barbara’s rule, however, you are less likely to drive up the balance of your credit cards unintentionally.  Before you swipe your credit card, think “Would I ask my bank for a loan to make this purchase?”  If the answer is “NO WAY” then pay with cash or debit instead.  For example, you wouldn’t walk into a branch and ask for a loan to pay for a pizza, would you? If you were brave enough to do it I can almost guarantee that you will not be approved (unless that particular loan officer has a great sense of humor).

If you reserve your credit card for big purchases that you could ask for a loan for, like car repairs or furniture, you will be a much more cautious spender. It’s likely you’ll have done some research into what you want to buy, where to get the best price, and whether or not you really need it. If it’s truly something you might not have immediate funds ready to purchase, your credit card can help you get it.  If you can pay for it out of your regular budget, do that instead.  No more racking up your balance on nail polish or new going-out clothes from Forever 21 (not that I’ve ever done that . . . ).

With the holidays, Black Friday, and Cyber Monday quickly approaching it’s more important than ever to remember this rule. All the knick-knacks, decorations, gifts, and food that come with the holiday can really put a dent in your wallet.  But putting all of those expenses on your credit card might not be the best solution.  Set a limit to your holiday spending that fits your current budget, even if these means cutting back a little. Start putting a little money away each week (start today!) so you have money saved specifically for holiday shopping.  And last but not least, see if your financial institution offers a Holiday Loan; the rates would likely be a lot less than your credit card and making the payments will improve your credit.

Leaving your credit card at home this holiday season might make your 2014 a little more merry and a lot brighter!