5 Ways to Save this Holiday Without Being a Scrooge

It’s December 1st. Which means my decorations are up, my advent calendar is out, and I will be playing Hanson’s Snowed In on repeat for the rest of the month. In other words, I am ready for Christmas.

Hanson-Snowed_In

Don’t lie. If you were alive in 1998 you own this on cassette tape.

One thing that might not be so ready, however, is my wallet. No matter what holiday you celebrate or how long your “nice list” is, budgeting for the holiday season can be tricky for even the savviest of shoppers. Between gifts to buy, parties to attend, and meals to make it’s easy for your credit card balance to soar higher than your good holiday cheer.

So to prevent any post-holiday horror at how much you spent being merry, I’ve come up with a few tips on how you can be both festive and budget-friendly this year.

  • Give DIY gifts Are you crafty? Can you knit? Or draw? Or take great photographs? Then maybe you can make a gift for less than you could buy one. Pinterest has no shortage of easy DIY gift projects with step-by-step instructions for how to make them. What’s more, your gift will have more sentimental value than a store-bought item because you personalized it. Or if you’re not that confident in your crafting abilities, check out gifts on Etsy. They’re often creative, fun, and handmade but often less expensive than what you’d find at the mall.
  • Or give a helping hand Sometimes the things we do for others are more valuable than the things we buy them. If you’re handy, offer your services fixing small problems around your grandparents’ house. If you’re good with makeup, volunteer to beautify your sister before a big night out (Note to my sister – don’t worry. I will not go near your face. This idea is meant for people who can be trusted not to make you look like 1985 David Bowie from the movie Labyrinth). Your time and help can make a much better gift than a last minute purchase from the bargain bin, and it will save you money.
  • Track your spending ‘Tis the season for giving, but that doesn’t have to mean giving more than you have. Keep track of your holiday spending closely with a notebook or online tool. Determine ahead of time how much you plan to spend on each person on your list, on holiday parties, and on other holiday activities. Then make sure stick to the plan. Writing down what you spend will hold you accountable to yourself and your budget.
  • Create a new traditionIf your gift-giving budget is tight this year, chances are the same might be true for your friends and family. Get together and create new holiday traditions that save everyone a few dollars. Consider doing a Yankee Swap or Secret Santa instead of a traditional gift exchange. Or pool the money you would have spent as a group on gifts for each other to do something good for your community, like sending care packages to local troops overseas or hosting a holiday dinner at a nursing home. It’ll get you in the holiday spirit without hurting your wallet.
gifts 2

At our credit union we have an awesome Adopt-A-Family tradition we do every year where we collect gifts for a local family in need. It’s a great way to get in the spirit and do something good for others! 

  • Consider a Holiday LoanUnless you’re a total Scrooge, holiday expenses happen. If you haven’t saved up money throughout the year it can be tough to find the money to pay for your holiday needs. Your financial institution might be able to help! My credit union offers a Holiday Loan that lets members who qualify borrow up to $2,500 for 12 months at a low interest rate. It’s a way smarter option than putting all your purchases on your credit card because the interest rate is typically much lower. Plus with an installment loan making the minimum payments will guarantee that you pay back the debt in one year. With revolving debt like a credit card it could take much longer. Holiday Loans can be a great way to get some extra jingle without hurting your credit.

Hope these tips help you get in the spirit while still staying on budget. Happy Holidays!

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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!

Seeing Santa in September: the Money-Saving Logic of Christmas Creep

If you’re a Christmas-enthusiast like myself, you are undoubtly familiar with the ABC Family’s “25 Days of Christmas.”  It’s an annual special the channel does where they play holiday movies 24/7 from December 1st all the way until Christmas Day.  Needless to say, ABC Family is the only channel I watch for that entire month; I love any Christmas movie, the hokier the better, and I am obsessed with the old Rankin/Bass films like Jack Frost and Santa Claus is Coming to Town. I look forward to those movies marathons every year.  

Santa

But a week ago I saw a commercial for something called “the Countdown to Christmas” that starts on November 20th and I was a little confused.  Like me you’re probably thinking, isn’t the “25 Days of Christmas” already a countdown? Yes, yes it is.  And doesn’t starting it early and playing Christmas movies willy-nilly sort of make the real holiday season less magical?  It sure does.  To me, adding extra days to the “25 Days of Christmas” is like adding days to your Advent Calendar – it ruins the whole thing, it makes no sense, and you just don’t do itBut apparently ABC Family has decided that 25 days is not enough.  They will start the Christmas season before the rest of us sit down for Thanksgiving Dinner.

In recent years the Christmas-Come-Early schtick has become all too familiar to the American consumer.  We roll our eyes and change the channel when we see holiday commercials on TV during Halloween, but so many major retailers are advertising holidays deals in October now-a-days that none of these ads really take us by surprise.  In fact, the marketing phenomenon is so common that it has a name, Christmas Creep, which urbandictionary.com defines as a:

“Universally hated, market driven phenomenon that if left unchecked will eventually culminate in an uninterrupted decade of concatenated carol medleys, closely followed by a glorious moment of frantic arson destroying every Christmatastasized mall in America.”

This year, Kmart wins the award for earliest Christmas ad of the season; their commercial started running on September 9th, when most kids were still getting on the bus for their first day of school. The company aired a television ad featuring a gingerbread man sneaking up on a women while a voiceover stated, “Don’t let the holidays sneak up on you. Shop early with Kmart free layaway.”  You can check it out here: http://www.youtube.com/watch?v=pNbHHwaXhYg

So why is Christmas coming earlier and earlier here in the U.S.?  Turns out ad execs don’t encourage Christmas Creep just because they’re little elves who like to spread holiday cheer; there less lofty reasons for adverstising early.  DailyFinance.com and financial columnist Jean Chatzky list a few:

1. No Presidential Election.  Last year, political attack ads and endless news cycles about the race between Barack Obama and Mitt Romney ruled the airwaves until early November.  This year, ad space is free for more cheerful messages about layaway programs and good deals on toys.

2. Late Thanksgiving/ Black Friday.  Thanksgiving is always on the 4th Thursday of the month, with Black Friday, the “official” start of the shopping season, kicking off the next day.  The 1st of November is on a Friday this year, which means Thanksgiving is a week later than usual (November 28th) AND Black Friday isn’t until the 29th. Instead of the usual 5 weeks between Thanksgiving and Christmas, this year only has 4.

3. Super Early Chanukah.  This year the first night of the Jewish holiday falls on the Wednesday before Thanksgiving (November 27th) so Jewish shoppers can’t wait for Black Friday to do their shopping. Though only 2% of Americans celebrate Chanukah, the early holiday is prompting some retailers to start advertising sooner, especially in areas like New York or Florida with a higher number of Jewish shoppers.

4. Low Spending Forecast. ShopperTrak predicts that holiday spending will rise this year, but only by about 2.4%.  In a still struggling economy, consumers are keeping a close eye on their holiday spending budgets.  Retailers are hoping to boost profits buy advertising early and promoting discounts.

Santa Carrying Shopping Bags

Knowing there’s reason behind the early season might not have you humming carols and smiling about seeing Santa in September, BUT you might be pleased to know that Christmas Creep is actually very good for your wallet.  Starting your holiday shopping early (maybe not in September but October or November) can help you stay within your budget and still get you everything on your Christmas list!  Here’s 5 reasons to shop early:

1.  Aggressive Ads = Great Deals. You might think that everything goes on sale December 26th, but there are actually a lot of great bargains to be found early in the shopping season.  Retailers want consumers to shop early and often, thus all the ads in September.  Early bird deals are often the most aggressive/ lowest prices of the year.

2. More Time. If you are my dad, you do all of you shopping Christmas Eve, and you are forced to buy whatever is in front of you.  If you need presents for the next morning, you’ll buy stuff no matter how high the price because it’s there.  Shopping early allows you to compare between other stores and online retailers for the best price on an item.  It also lets you be more picky; if you don’t see something you really like at one store you’ll have the time to browse elsewhere.  No time crunch means less impulse buying.

3. Layway & Holiday Loans. It turns out, Kmart was doing you a favor with that Christmas in September ad.  Using financially smart products like Kmart’s layaway program help you pay for the holiday without racking up the charges on high interest credit cards.  If the stores on your shopping route don’t offer layaway, consider applying for a holiday loan.  Many credit unions offer low rate loans specifically for holiday purchases.  Mine is offering a holiday loan right now at 7.99% (which is way better than my 19% credit card) for up to $2,500.  Making payments on a holiday loan will keep your monthly budget on track and help build your credit. If you haven’t been putting a little money away here and there throughout the year for holiday spending, a loan like this is a super smart way to finance your Christmas shopping.

4. Online Shopping. If you shop early online, a large number of retailers offer deals on shipping costs (some even ship for free!).  Even if there’s no shipping discount, you won’t have to worry about paying extra for next-day shipping or wonder if your items will get delivered before the 25th.  And finally, you’ll have time to return things that got ruined in the mail or that don’t look as nice in person as they did on your screen.

5. Spread It Out. I don’t know about you, but my budget doesn’t really accomodate dropping two grand in one day during a holiday shopping spree.  I have a little wiggle room, but most of my money goes towards rent, food, and those pesky student loans.  If I start shopping early, I don’t have to buy everything on my list all at once.  Spreading the cost out over 2 or 3 months worth of paychecks makes holiday shopping a lot more manageable because my budget can handle $50-75 every few weeks. While I could just put that money in a Christmas Savings account, I know I’m more likely to spend it on other things if I have access to it.  If I already bought the items, I can’t buy shoes or coffee with the funds instead.  Shopping a little at a time makes my wallet and everyone on my list have a merrier Christmas.

Here’s a few other good reads about holiday shopping:

http://adage.com/article/cmo-strategy/105-days-til-christmas-kmart-airs-holiday-ad/244064/

http://www.huffingtonpost.com/2013/09/12/kmart-christmas-ad_n_3916000.html

http://www.dailyfinance.com/on/why-christmas-is-coming-early-this-year/

http://www.littleones.com/family-life/7-smart-reasons-to-start-your-holiday-shopping-early/

Happy Shopping and Happy Holidays to You!