The holidays are here.
And with them come all the sales, deals and specials aimed at shoppers looking to get a head start. For those who aren’t careful though, the holidays can be an expensive time of year filled with debt and, sometimes, regret.
With some simple advice from experts, consumers can avoid overspending and enjoy a more responsible holiday season.
2009 holiday spending by the numbers:
$811 - amount average consumer spent
$896 - average amount spent by those shopping with a credit card only
$112 - average amount spent over budget
39 percent - consumers who made budget and went over
13 percent - spent responsibly, had a plan and paid cash
12 percent - consumers who spent nothing for the holidays
13.6 million - number of people still paying off last year’s holiday debts
Source: Robert Baker, education director at Housing and Credit Counseling Inc.
• Make a budget before you shop. Kansas University lecturer Bill Lewis, who teaches a personal finance class, said having a budget going into the holidays is essential. He said when consumers have a budget they’re more likely to know when they deviate from it, consequently knowing there’ll be a price to pay later.
• Paying with cash can help you avoid spending more than you mean to. Robert Baker, education director at Housing and Credit Counseling Inc., said people who use cash tend to spend less. The whole idea behind this is that using a card separates you from the physical cost of the item.
Lewis also mentioned shopping with cash as a good way to keep to a budget. If you only carry cash for what you plan to buy, shopping can be a more efficient experience.
“When that’s gone, that’s it,” Lewis said. “You physically feel what you’re losing. It inhibits some of the spending.”
• Don’t discount the idea of personal, low-cost gifts. Lewis said people should think back to past holidays and figure out what gets them the most enjoyment. Baker said making gifts was an easy and meaningful way to keep from overspending during the holidays. Sitting down with family members to talk about holiday finances is also a good idea, he said.
• Don’t buy things just because they’re on sale.
“People love sales,” Lewis said. “If it’s something you’re going to buy anyway, it’s a good deal. If it’s something you only buy because it’s cheap, then it’s not a good deal.”
Baker suggested holding out for substantial discounts while shopping for the holidays. He said as much as 87 percent of shoppers won’t buy gifts unless there’s at least a 20 percent discount. Some of the largest discounts can be found after the biggest national shopping days.
“A lot of things after Christmas are on sale,” Baker said. “You can look like a big spender without actually being one.”
• Use self-control. Lewis said much of the problem with overspending during the holidays could be attributed to a lack of self-discipline.
“It comes down to whether people have it or not,” he said.
Baker said he sees the biggest bump in consumers when holiday bills start coming due, usually in late January and February.