Credit advocate suggests planning ahead and savvy shopping to stay out of debt
San Mateo, Calif. (PRWEB) November 20, 2012
Only weeks before the winter holidays, and with Thanksgiving weekend here—the official start of the holiday shopping season—now is the time for consumers to plan their holiday gift-giving strategy so they do not go into debt, said Kevin Gallegos, vice president of Phoenix operations for Freedom Financial Network (FFN).
The National Retail Federation’s annual holiday spending forecast, released in October, anticipates that total consumer spending for the winter holidays, across all categories, will rise by 4.1 percent to $586.1 billion. That is the highest projected increase since the start of the recession, although it is a little less than last year’s actual year-over-year spending increase of 5.6 percent. The specific category of online spending is expected to grow even more, rising 12 percent over last year, to as much as $96 billion.
“With those increases on the horizon, consumers need to be careful to stick to their budgets and not over-spend for the holidays,” Gallegos said. “Consumers who are among those planning to do more shopping online should be especially careful to keep their personal information safe.”
Gallegos offered these nine specifics on managing a holiday budget:
1. Plan ahead. “‘Budget’ is really synonymous with ‘plan,’” Gallegos noted. He suggested consumers take a look at their household budgets to ensure they are up to date. Then they should develop a holiday-specific budget. This budget should include all of the household’s gift recipients, along with gift ideas and estimated costs. Also include cards and postage; decorations; entertaining (including food, drink, special garments, child care, etc.); year-end tips for newspaper carriers, babysitters, housecleaners, doormen, hairdressers and other service providers; gifts for teachers, doctors, neighbors or others; travel costs.
2. Compare budget to reality. When it comes to gifts, be sure the gift list fits within the budget. “If the budget is smaller than the givers’ generosity, adjust the list before you start shopping,” Gallegos advised.
3. Search for savings. Starting now, watch the mail, email, newspaper ads and catalogs for discount codes or offers. Coupon codes or promotion codes sometimes are available online. A quick search for the retailer’s name and “coupon code” can turn up a discount code. Smartphone or tablet computer users can try shopping apps that let users compare prices online and offline. Find a way to track deals in a spreadsheet or notebook to find maximum savings, and note expiration dates.
4. Count the total cost when shopping online. Shipping can destroy a gift-giving budget. Try an online shopping tool, providing a list of online retailers that offer an item, with the list price, shipping costs and total price. That search can help identify the lowest total cost.
5. Keep debit cards offline. Debit cards can be a good way to stay within budget, because a user cannot spend more than available in a bank account. But when shopping online, debit cards expose shoppers to risk. A debit card number thief can take funds directly from their victim’s checking account. This can create a cascade of other problems while the account owner files a protest and waits for the bank to return the funds. Instead, complete online shopping using PayPal (which can transfer funds directly and securely from a checking or savings account) or use one dedicated credit card, which makes it easier to track spending.
6. Put away the plastic. In general, it’s best to avoid using credit cards to pay for purchases. Studies show people spend more when they pay with plastic. Switch to cash (or PayPal) whenever possible. Shoppers should tally the amount spent at each store or website, and charge no more than they can pay in full each month. Those who need more spending discipline sometimes find success when they go online immediately after a charge and transfer the charged amount from a bank account to pay off the balance.
7. Consider a pre-holiday spending fast. A spending fast entails not spending any money except on necessities. That means no extras at the grocery store, no new or used clothing, no dining out, etc. This approach requires a commitment, but can help accumulate savings and avoid going into debt.
8. Eat out less. For those for whom a fast seems too extreme, trimming daily expenses up to the holidays might seem more manageable. Dining out can be an easy target for many, said Gallegos. The average American spends more than $2,600 each year eating out, which equates to about $50 a week, per person. With a median per-capita income of about $27,000, people spend, on average, about 10 percent of their income dining out. Breaking that habit could put several hundred dollars into a household’s holiday kitty.
9. Don’t wait till the last minute. For many people, the holidays result in hundreds – or thousands – of dollars in new credit card debt. Starting shopping early can give shoppers more time to find bargains. Gallegos cautions, however, that the key to this strategy’s success is to shop with a list. “Mark off gift recipients on your list when you’ve made purchases, and do not add more gifts,” he said. “It can be tempting to buy ‘just one more thing,’ but doing so for everyone on your list can set your budget back significantly.”
“It is all too common for consumers to go into holiday credit card debt to show others they care,” Gallegos said. “Fortunately, with some advance thought and planning, it is possible to have a happy holiday without getting into financial trouble.”
Freedom Financial Network, LLC (FFN), provides comprehensive consumer credit advocacy services. Through its Freedom Debt Relief, Freedom Tax Relief and ConsolidationPlus products, FFN works as an independent advocate to provide comprehensive financial solutions, including debt settlement, debt resolution and tax resolution services for consumers struggling with debt. The company, which has resolved more than $1.7 billion in debt for more than 140,000 clients since 2002, is an accredited member of the American Fair Credit Council, and a platinum member of the International Association of Professional Debt Arbitrators. The company holds the Goldline Research Preferred Provider certification for excellence among debt relief companies.
Based in San Mateo, Calif., FFN also operates an office in Tempe, Ariz. The company, with more than 550 employees, was voted one of the best places to work in the San Francisco Bay area in 2008, 2009 and 2012, and in the Phoenix area in 2008, 2009, 2010 and 2012. FFN’s founders received the Northern California Ernst & Young Entrepreneur of the Year Award in 2008.