Just what I've been holding out for 0 percent financing on the Hummer.
In case you didn't see the recent full-page ad in The Wall Street Journal, the Hummer is the civilian version of the four-wheel-drive military vehicle that replaced the Jeep. The coolest Army and Marine ones have machine guns mounted in the rear, but we ordinary folk just have to pretend.
In fact, pretending is about all I'm going to do on this front, since the Hummer's six-digit list price doesn't fit my three-digit Christmas budget even with 0 percent financing.
Such 0 percent loans are great. This recession-stressed holiday season, you can get them on cars, computers all sorts of things. Lots of deals also allow you to postpone payments for months. It feels like getting a big-ticket item for free.
Which is why it's time for the annual list of holiday-shopping tips and warnings. As I've said in previous years, I don't really expect to follow all the guidelines myself, since financial rectitude runs afoul of holiday spirit. I write the rules to keep my conscience clear.
Beware of 0 percent financing
The 0 percent financing deals, for starters, often aren't as good as they look. On a car, for instance, you may have to give up a "cash back" deal or other discount to get cheap financing. So before jumping at a low- or no-interest deal, do the math to figure whether it would be cheaper to get a lower sales price, even if you have to pay interest on a loan. A salesman should be able to tell you the total interest charges over the life of the loan. Or figure them yourself with the calculator at www.financenterinc.com /products/calclist.html.
Also, on some items, such as computers, 0 percent financing deals require you to clear the debt within a specified time. If you don't, you will be charged interest accrued from the date of purchase, often at a double-digit rate. So, as in all things, read the fine print.
Avoid using credit cards
For many of us, the biggest enemy of smart holiday shopping is the credit card. It makes it easy to rack up big bills and onerous financing charges.
To avert this problem, the experts usually suggest starting with a holiday budget, broken down by person: Here's how much I'll spend ... Here's how much I'll spend on uncle Joe ...
This is sound advice, but I've never seen data on how many people actually stay within budget. I sure don't. After all, the best gifts are often the things we don't think of until we spot them in the stores. There has to be budgetary leeway for the unexpected.
Still, it takes only a little prudence to avoid costs that are completely unnecessary. Paying with cash or checks, for instance, saves you the high interest charges that accompany credit cards with unpaid balances. And watching your balance dwindle and your wad of bills get thinner gives a marvelous boost to your self-control.
If you're addicted to the convenience of plastic, try a debit card that will draw from your checking account. Keep a tally of expenses, else you risk an overdraft charge that could be as bad as credit-card interest.
And if you must borrow for holiday expenses, look for the lowest interest rate. Your company credit union may offer cheap personal loans. Or you could apply for a new credit card that offers a low "teaser" rate for the first few months. Card issuers do this, of course, because low rates lure lots of suckers into spending sprees. Victims rack up debts too high to pay off before the end of the teaser period, then have to pay sky-high rates later.
By shopping early, you avoid the last-minute pressures that can lead to overspending. Unfortunately, by shopping early you could end up paying more than if you wait for the final discounts. There's no sure-fire way around this dilemma, but you improve your odds by shopping around enough to get a clear idea of what things cost.
The Internet offers easy price comparisons. Be sure, though, to find out whether the online merchant will charge sales tax. And don't forget to factor in shipping costs, including those for any returns or exchanges.