The following is a guest post
There are several financial mistakes that can set you back over the Holidays. It is important to be aware of what those mistakes are so that you can keep from making them. Here are 5 common financial mistakes to avoid this holiday season and what you can do to prevent making them:
Charge Now, Pay Later
It can be to tempting to put everything on a credit card and pay for it later. The challenge is that if you carry a balance, you will end up paying more for those items in the long run. With the average credit card interest rate close to 15%, you could end up spending an additional $150 for your Christmas gifts. The best way to avoid this is to set a budget for your holiday shopping and make sure that you have the cash to pay for all of the items BEFORE you head to the store.
One idea that you can try is called “The Countdown Fund.” This is where you determine the dollar amount of your shopping budget and then start putting away money every paycheck until you have arrived at that number. For instance, lets say that your budget for gifts is $500 and you have 2 paychecks before Christmas In this scenario you would need to put away $250 into an envelope and after the 2nd paycheck you will have $500.
You are essentially counting down how much you have left to save before you achieve your goal. This way you never have to pay interest for your holiday shopping and you will have peace of mind knowing that you can afford to buy gifts for all of those on your list.
Buying Gifts Not on Your List
Impulse buys are notorious during the holiday shopping season. There will be numerous items placed right at eye level for you to see as you navigate the store or as you wait in the checkout line. These can be budget busters, so do your best to avoid the temptation to buy these last-minute items that are not on your list. One way to try to avoid impulse buys is to shop online.
Yes, I know websites do try to recommend additional items when you are buying online but it doesn’t have the same psychological effect. There is something so much more powerful about seeing an item in person; to be able to pick it up in your hands and play around with it. Online you don’t have those added influences as it is just an image on a page.
Forget Your Pocket Change
If you live in a city where there are parking meters, then you need to make sure that you have change on hand. I recently noticed that the meters in my city started taking credit cards, however, I also noticed that the minimum charge of $1.50. So if you only plan on being there for 30 minutes, you would be better off just bringing a of couple quarters with you to avoid paying more than needed.
Also, I don’t know about you, but I loathe having to pay parking tickets. One sure way to avoid getting a parking ticket is to make sure that the meter is adequately fed.
Shop at Unsecured Websites
One of the most common trends around the holidays is to price shop. Everyone wants the best deal, however, just because a website says it has an item for a lower price doesn’t mean that you should buy from them. I have had great success with Amazon.com and Ebay.com to buy gifts and I believe that is mainly because they both have great user rating systems.
Because the people selling the products will be reviewed by those purchasing from them, it encourages great customer service. If a seller misleads you in any way they are likely to lose their ability to sell on those sites and therefore are motivated to do right by you. There are many questionable sites out there, so if you feel at all uncertain about one, leave it right away and go to one that has a solid track record.
Buy Gifts for the Reward Points
Although rewards points can be exciting, they can also be costly. If you spend $1000 to get $10 in return AND you only needed to buy $500 worth of stuff then that doesn’t make sense. Also, If you have a card that will give you 5% cash back but the interest rate on your card is 15% and you are not able to pay it off right away, then that doesn’t sound good either. Like stated at the beginning, the key will be to set a budget for your holiday shopping and to make sure that you have the cash to back up that budget.
Have you made any of these mistakes? If so, what have you done to prevent doing them again?
About Deacon Hayes
My wife and I paid off $52,000 in 18 months and now I have a passion to help others get from where they are to where they want to be; Especially when it comes to managing their finances. In 2010, I started the blog, WellKeptWallet.com and it has become the primary outlet for this passion.
|SB is a husband and working as a software professional for a Fortune 100 corporation in Florida. Thanks for visiting the blog.
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