December 2008: e-Wealth Coach Email
This month’s e-Wealth coach is Stephen Brobeck, executive director of the Consumer Federation of America. CFA is a non-profit association of some 300 consumer groups that works to advance the consumer's interest through research, education, and advocacy.
Saving During the Holidays
Dear Saver,
The holiday season can be a treacherous time financially, as gift-giving and celebration obligations can add up to a big bill. But, with just a little planning, you can reduce holiday spending without sacrificing quality. The following tips will help do you just that.
Make a Budget and a List: Right now, decide how much you can afford to spend and stay within that budget. Staying within budget will be much easier if you make a price list of all gifts and other holiday items you plan to purchase. It's easy to overlook extra expenses for holiday foods, party clothes, holiday décor and postage.
Comparison Shop: You can easily save more than 10 percent on most items, sometimes considerably more, by comparing prices at different stores. The easiest way to do this is to identify sellers using the Yellow Pages, and then call several. Or use the Internet and compare offers online. But when shopping online, shop wisely. Be sure you are purchasing from a secure site (look for the “https” in the website address and the locked padlock icon on the toolbar), and review emailed statements for accuracy as you receive them.
Pay Off Debts Quickly: You’re less likely to overdo it if you pay in cash. If you must make holiday purchases using credit, use a lower-interest card and pay off this debt as soon as possible early next year. Don’t borrow more than you can repay in several months. Remember that credit card debt is relatively expensive. And if you only make the required minimum monthly payment, you may never pay off the debt.
Plan for Next Year by Opening a Christmas Club Account: While these accounts do not pay much if any interest, they provide a practical way to save small amounts over time. Ask your credit union or bank to automatically transfer funds from your checking to your Christmas Club account every month. The discipline of saving reinforces your good budget intentions.
Be Smart About Gift Cards: If you don’t use a gift card promptly, it can lose value in one of several ways: It can expire and become worthless; monthly maintenance fees can erode its value to zero; the store that issued it can go bankrupt or stop honoring gift cards. If you give or receive a gift card, read the fine print. And remember, a gift card is handy and convenient, but like cash, if you lose it, it's gone.
Pay Attention to the Return Policy. Some stores are tightening their policies. Pay attention to the return policy when you make a purchase; keep receipts and note time limits, restocking fees, and other factors that may affect your recipient.
Find Low- or No-Cost Ways to Celebrate. Adding a few changes can ease the strain on your spending budget. For example, draw names to limit the number of people for whom you purchase gifts; give homemade items; make your own gift wrap; organize a potluck rather than trying to make, and pay for, the entire holiday meal.
Following these tips will help you enjoy the holiday season without going over-budget.
Happy Holidays!
Sincerely,
Stephen Brobeck
Consumer Federation of America