How the savvy shopper avoids Christmas debt
As the holiday season approaches, it is all too tempting to get caught up in the festive spirit, throw care to the wind and overspend.
Then in January when we stare in disbelief at the credit card bill, we probably wish we had not mounted up so much Christmas debt.
But the American Bankers Association (ABA) says you can avoid this financially bleak New Year scenario if you adopt the seven habits of savvy shoppers:
- Plan a budget: don’t start your shopping until you have a realistic figure of how much you can afford to spend. Consider your income, subtract your monthly expenses, and add any savings to what is left. If you are thinking of using your credit card, make sure you know how much you can afford to pay back in January.
- Keep track of other costs: make sure you take into account other extra costs at this time of year, such as extra food and drink, entertainment, gift wrapping, postage, and donations to charity.
- Limit your gift list: long before you start buying presents, make a list and check it twice – limit gifts to family and close friends and keep track of how much you spend on each.
- Shop early, spend wisely: when you have your list, shop around to get the best deals. Go on comparison websites, or use an app to find the best prices, and never shop under pressure – make a note and come back later. And before you press the final checkout button or go to the pay desk, check that the item(s) you are buying are within your budget.
- Steer clear of traps: don’t sign up for store credit cards just to secure a good deal on one item and don’t get sidetracked by spectacular sales – stick to your list and your budget.
- Use credit carefully: decide beforehand how much of your spending budget you are going to carry on your credit card. Stick to one card, preferably the one with the lowest interest rate and leave the others at home. Decide before you start your shopping the date by which you are going to pay off your Christmas debt and commit to it. Also, keep an eye on your statements and report any unauthorized use immediately.
- Keep your receipts: you may need them for possible returns and to keep track of your spending, plus to check your credit card statement. They are also useful as a record of spending so you can budget more easily next year.
ABA’s CEO, Gov. Frank Keating, says:
“Being a savvy shopper is a vital way to avoid the debt of Christmas past. A little advance planning can prevent a financial hangover when the bills arrive in 2014.”
And finally, there is an 8th habit, which can be your first New Year’s resolution – if you don’t have a savings account, open one now and start saving towards next year’s holiday budget.
“Many banks offer customizable savings plans such as Christmas accounts that let you set aside money throughout the year for your holiday spending,” says Keating.