Don’t Let Black Friday Put You in the Red

by SUSAN CHADWICK, MORE THAN WHEELS | Wednesday, November 23, 2011,3:54 PM

The holiday season begins the day after Thanksgiving with the cha-ching of cash registers in every store and sales starting as early as midnight on Thursday. Called Black Friday, it’s touted as the biggest shopping day of the year when retailers rake in enough revenue to end their fiscal year “in the black.” Although it is so hard not to be swept up into a shopping fever—don’t let the frenzy of the season push your own budget into the red!

We’ve already seen the circulars filled with electronics, gadgets and luxury items that a few months ago you were able to resist. Suddenly people feel justified in buying that 50” high definition television set for Dad or the ultimate XBox-360 system for the kids. What is it about the holidays that make us believe we can afford things just because it’s Christmas or Hanukkah? Too many people spend much more than they can afford to during the holidays on presents for themselves and others, and end up paying for those things for months later. The high interest fees incurred from credit card debt ends up derailing the original savings from sale prices. According to the National Retail Federation, up to 152 million people plan to shop Black Friday weekend, higher than the 138 million people who planned to do so last year. And many of those are among the 14 million Americans still paying off last Christmas.

How to take control of your spending
Being in control of your spending should be a year-long practice, but what can you do now to prevent this year’s holiday spending from snowballing into next year’s debt?
•    Make a holiday shopping budget and stick to it. Be aware of what your regular bills are for the month such as utility bills, phone, rent, car payments, etc., and don’t spend needed money on gifts. Missing payments on bills will damage your credit far beyond the holidays.
•    Don’t let guilt override your reason—shop with your head, not your heart. Generosity and finding the perfect gift for friends and family are not good reasons to put you into debt.
•    Be creative and make gifts such as baked goods, jam, or photo albums. Put together photo collages or make simple gift baskets of a low-cost DVD and a pack of micro-wave popcorn.
•    Make the holidays more about family and traditions and less about gifts. Look for free or inexpensive activities to do together building memories that will last longer than battery-operated gizmos.

Make Financial Resolutions to start the year off right
The best gift you can give yourself and your family is financial security, which starts with taking control of your money—don’t let your money control you. A surefire way to gain control of your money is to find out what you are spending it on, and to write it down. Let’s start with the cash you use during the week as you go about your daily life. Are you buying a coffee every morning at your favorite coffee shop—and sometimes getting a donut or breakfast sandwich too? That can easily be $5. Are you also getting a sandwich at lunch, and maybe hitting the snack machines in the afternoon? Another $10 has slipped through your fingers. Write down everything you buy each day for a week, and you will be able to see where your money is going, and make changes to rein in spending. Making coffee at home and bringing it in a travel mug, and bringing a sandwich and snack from home, saves you $15/day. That’s $75/week, $300/month and $3,600 a year!

The best way to get out of debt and achieve financial security is by avoiding the most common financial mistakes. Following these rules will allow you to be in a much better place next year when the holidays come around again.
•    Pay yourself first. After tracking your spending, you will be able to find $60 or much more each month and put that into a savings account. The best way to build credit is by consistent, on-time payments or savings deposits.
•    Write down all your expenses, make a budget and pay all bills on time.
•    Use credit wisely. Having a credit card and paying the balance each month can help your credit. Make a plan to start paying down any balance, and only use cash when making new purchases.
•    Save money on utilities. Find ways to reduce your electric bill—turn off lights when not in a room, reduce hot water usage, use air conditioners sparingly and increase the temperature to 70. Reduce what you spend on telephone service to just what you need by eliminating extra features such as call-waiting and caller ID. Check for basic pay-as-you-go cell phone plans that cost less.
•    Say NO to money traps. Avoid check cashing fees by opening a checking account at a local bank or credit union that offers free checking. Don’t fall into the trap of rent-to-own for furniture or appliances—you will end up paying hundreds more than the item is worth.
•    Avoid high-interest pay day loans or car loans. If you are unable to pay back a pay day loan in the short amount of time given, you will be stuck with very high interest payments and penalties that will end up doubling your loan. If you need to buy a car but because of less than perfect credit can only get a high-interest loan, look for better alternatives, such as calling nonprofit organization More Than Wheels to see if their program of credit repair and low cost, low-interest car loans is the right program for you.

Don’t wait until January 1st to make your New Year’s resolution. Take the Financial Resolution Pledge now.
I resolve to:
•    Watch where and how I spend my money
•    Pay bills on time and communicate with creditors before a payment is late
•    Pay myself first and save some money every week
•    Compare cost and value of small and large purchases before making a spending decision.

Susan Chadwick is the Marketing Communications Manager at More Than Wheels, an award-winning nonprofit that helps people get the best deal on a reliable, fuel-efficient car while helping them repair their credit and negotiating the lowest car price at preferred interest rates. www.MoreThanWheels.org

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