Robert Baker is a certified consumer credit counselor with Housing and Credit Counseling. They teach a class on how to have a debt-free Christmas.

Moderator

Hello, I’m 6News Anchor Janet Reid and with me is Robert Baker, a certified counselor with Housing and Credit Counseling. He’s here to talk about how not to go into debt while doing your holiday shopping.

Robert Baker

Thanks Janet. Happy to be here to answer questions for consumers. This can be a busy time of year for budgets. Happy to provide any answers that will avoid a “red ink” holiday hangover.

Moderator

Okay, let’s get started. Here’s the first question.

justthefacts

Why is it so hard for so many people to live within their means? In China, the average citizen saves 50% of their income. Here, in the land of affuence, people rarely save anything. Is there some class or something people could take so they learn to stop robbing Peter and Paul in order to buy things they don’t really need anyway?

Robert Baker

There’s several reasons for the average negative 1% savings rate in America. Some form of credit is almost always easily available, be it a 90 days same as cash offer or one of the 9.5 billion credit card offers mailed annually to American households.

A second reason is the high cost of living for the average consumer. Health care costs (insurance, billing, prescriptions) have risen over 75% in the last five years. The average American wage is not keeping pace with increased costs of medical, gasoline, etc.

However, because there is so much disposable spending in America (such as meals out), there are many simple cost saving things a consumer can institute to save money. Housing and Credit Counseling does offer a class on Asset Building called “Grow Your Dough.” It is offered free of charge to any group of 10 or more who makes a request in advance. There are also many good self help finance gurus who have columns in the paper (LJ World syndicates Michelle Singletary)or books available in the library.

Moderator

Let’s talk a little bit about shopping online. Are there any hidden dangers people should be aware of, or are there benefits to making purchases online?

Robert Baker

There are pluses and minuses to any online shopping. Since most online sites demand purchases be made by credit card, if one has what I call the “plastic obsession compulsion,” it’s easy to overspend. Online security can be a concern as well. Is the online site “lockbox protected?” Does your computer have a good firewall and/or virus protection software?

On the plus side – for the busy consumer online shopping offers more choices for your limited shoppping time, without crowds and usually at a price you can afford because usually there is no sales tax and, if the purchase is large enough, no shipping or handling charges.

However, nothing replaces that personal touch or one of a kind item from your local merchant that reflects Lawrence character.

Moderator

With Christmas now just a couple of weeks away, we’re kind of getting down to the wire now. But looking ahead to next year, are there some things people can do to make holiday spending a little easier on their pocketbooks? (planning ahead, layaway, service gifts, etc.)

Robert Baker

It’s never to early to budget and in some respects this addresses the previous question about why Americans sometimes find it hard to save. Easy credit – the buy now, pay later approach – can lead to impulse buying and overcharging. Did you know that the average American spends $800 at Christmas. If one were to charge $800 at the average 21% interest on most retail store cards, and only make minimum payments – it would take 9, count ’em 9, years to repay the original $800 balance. So what’s the answer? We all need to be like Santa in that Coming To Town song. That is, making a list and checking it twice. No plan equals no budget equals impulse spending. And if you plan involves spending substantially less than the average $800, be creative. Take advantage of post holiday sales, especially for cards, decorations, etc. Think about ways to purchase gifts that leave no balance. A service gift certificate. Offering to babysit, cook a meal for two, fix a car, refinish a chair, teach someone to fly fish etc. And what about gift cards? It’s the fastest growing Christmas gift in America because you can limit the amount to fit your budget and you can find a card for every taste.

And if all else fails comes to next year’s Housing and Credit Counseling Holiday Spending class.

Moderator

What about the costs of mailing all of those holiday packages?

Robert Baker

Glad you asked. That’s one of many “hidden” costs associated with holiday spending and tracking your budget during the holidays. The cost of shipping packages can be quite expensive if you live far from those you’re sending gifts. Especially if the gifts are somewhat heavy. Mailing a one pound package costs $3.89. A ten pound package costs $6.60. And the deadline for package mailing is next week. Mailing can also be expensive if you send a list of cards. When budgeting consider sending a postcard (cheaper postage) or an E card (no postage). And don’t forget those “other holiday costs” such as the cost of entertaining, traveling etc. All part of the budget. For consumers wanting to chart all the out of pocket expenses immediately, stop by any Housing and Credit Counseling office (Lawrence, Topeka, Manhattan & Emporia) and pick up our handy dandy Pocket Tracker that fits in a wallet and has categories where you can list amounts spent.

Moderator

So, if you spent a little too much money on all of those holiday gifts, and then the credit card bill arrives in January, what is the first thing you should do?

Robert Baker

Hate to sound like a budget counselor but the first thing you should do is sit down and look at your entire household budget, including flexible spending items such as travel, kids costs, health care, car repairs and work up a reasonable monthly budget. Then see if you have any wiggle room to hasten repayment. Housing and Credit Counseling Inc. (HCCI) has calculators at our online site (www.hcci-ks.org)under the Resources menu. They can help you fashion a speedier repayment plan. If all else fails and you don’t know where to turn, HCCI counselors are trained to conduct in depth budget counsels. To help you work up a budget and to discuss all options available for repayment.

Moderator

Thanks for joining us this afternoon, Robert. If people have additional questions, I understand you have a number of resources both at your office and on your website.

Robert Baker

Believe it or not, this chat was the tip of the iceberg. If consumers wish to investigate more our HCCI website has a variety of serivces available. In addition to the Resource menu you can access a description of any or all of our 19 classes available to the public. You can also read about Tenant Landlord issues or schedule an appointment if you feel you want to seek budget counseling help. And if online services are not for all consumers, just call 800-383-0217 and the Operator will schedule an appointment at any of our four office locations. Thanks for asking me to chat, Janet. If anyone needs to have a quick follow up question answered, have them call and ask for me. If I’m in the office I’d be happy to take the call.