Holiday Shopping Tips to Avoid Debt
November 19, 2009
The holiday shopping season is almost here! With Black Friday just around the corner, you can use these tips to help you stay out of debt while buying gifts for all your friends and family this year.
Set a budget: Obviously if you have credit card debt now, you don’t want to elevate those numbers. Remember, your credit score depends more now than ever on how high your balances are. Start by setting a holiday spending number you will not exceed and make cash your first priority in paying for those gifts and other goods.
If you haven’t started shopping yet, do some Christmas budgeting and determine how much money you can realistically set aside and stay as close to that number as you can. Commit to avoiding ANY unplanned purchase above a certain threshold, such as $25.
Revamp your gift policy: Does everyone on your gift list over the age of 21 really need a present? The answer is as individual as your family and friends. But, if you think it might be welcome, make a suggestion for a gift drawing, a budget limit, or a moratorium on gifts for adults or some other alternative where you trade off gifts for quality time.
For instance, you might agree to take each other out to dinner during the New Year or find some other fun way to spend time together. You could help a friend or family member with a household project that could save them money. And in the end, children seem to enjoy their holiday gifts the most, so focus on buying presents for them.
Go debit: Debit cards with a bankcard logo are typically welcome at most stores where credit cards are accepted. This way, you pay cash without carrying cash. If you don’t have such a card, you can probably get one from your bank to replace your traditional ATM card, but remember to tell them to limit your buying power to the cash balance in your account. Also, review your bank’s debit card theft policies in case your card is lost or stolen.
Browse online, and then compare at local stores: Whether you plan to shop online is a separate issue, but browsing online can be a very good idea. “Shop-bot” price comparison websites can help you determine general price ranges for gifts you need that are sold online.
Once you have those ranges, get on the phone and determine whether you can buy the same items more affordably at retailers close to home – save gas whenever possible.
Don’t forget the coupons: Coupons aren’t just in newspapers or direct mail anymore. If you know particular stores where you’ll shop, get on their e-mail lists – you’ll start getting coupons and news of specials on a regular basis. Also, sign up at manufacturers’ websites for coupons or discount codes for shopping online.
Don’t forget taxes & shipping when shopping online: Online prices might look like a great deal until you realize you may be spending another 20 percent of the gift’s price to send it to your house or the recipient. Here are some tips on how you can save money on shipping.
Also, read product descriptions very carefully to make sure what you’re buying contains all the features of the item that you could buy at the store. At the same time, if there is a legal opportunity to avoid paying sales tax, watch for that.
Allocate spending for charity: You can either make charity a separate item in your annual budget or part of your holiday budget, but if there are specific charities you want to support by yearend, it’s a good idea to decide on those amounts before the holiday shopping season gets underway.
This way, you’ll support the organizations you wish to without going outside your budget. Also, don’t forget to check with your employer to see if they’ll match your contribution and consider gifts of appreciated stocks rather than cash if it fits your charitable goals and tax situation.
Give yourself the gift of financial analysis: If you’re trying to get your finances in order, you could buy yourself an hour of time with a financial advisor. This meeting could extend beyond your holiday spending goals to setting targets for saving, investing, extinguishing debt, and setting financial goals for the future.
These holiday shopping tips were produced in association with the Financial Planning Association (FPA), the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning.
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