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.
Great post! The holiday season is one of the worst time of the year to save money. Most of us seemed to have caught the spending bug and we just can’t help ourselves from overextending our budget. It’s always good to come across articles like yours to remind us of what we need to avoid this season.
It is so true, it can be difficult to save money over the holidays. I hope that you’re able to stay within your gift budget this holiday season!
One of the hardest things for us and many others is sticking to the list. We have a hard time because we start to see items that are on sale at an amazing low price and we know we will want to purchase it at some point but now is a great price. We have to really stick to our guns and say no, we will wait. It’s so hard but we get through it as we don’t want to spend more than what’s in our Christmas budget. Mr.CBB
Sticking to the list has been a challenge over the years for me as well. I have found that when I buy only the things on the list that I have peace of mind. And that is a great feeling.
I have also discovered that if you buy your gifts online too late, you will have to pay the inevitably high shipping charge for them to get there on time. I am a huge fan of Amazon’s Super Saver Shipping but even if you ordered your Christmas gifts today that shipping option may not have them arrive on time.
In addition to that you can avoid the same fate by avoiding the American Post Office this time of year. Go a different route like UPS or Fedex. The reality is the lines are incredibly long and you will also inevitably pay more for postage as they are just too busy this time of year. Understandably they are fairly grumpy too so it would be appreciated to avoid the confrontation.
Those are two great points! I have tried to ship things during the holidays and the Post Office is a zoo. One of the things you can do if you want to take advantage of the Post Office’s lower prices is to print your shipping label out online. Then all you have to do is drop it in the bin and you don’t have to wait in line!
Great advice! My wife and I do the “Countdown Fund” you described above. We start ours in January for the following Christmas. Put a little bit aside each month and when December rolls around you have what you need. Makes shopping much more enjoyable.
When buying gifts to my friends I always set a budget for it and also go shopping 2 weeks before Christmas because it saved time, money and of course I don’t like to push around in the pool of many people in boutiques.
Shopping a couple weeks before Christmas is a great idea. We try to do that as well, mainly because I am not a big fan of waiting in long lines.
Very notable precautions. With great shopping offers around, it is really easy to get carried away during this season. It’s nice to learn and keep these mistake reminders in mind. Thanks.
We went to shop during night time after work, just to find out the mall is full of shoppers. We don’t have more options to look for good and affordable items. We spend more time in the counter because of long queue.
Very Difficult also to find available parking space. I think the better solution is to purchase through if possible.
It seems to crazy to me. There are so many posts about all these ways to save money for Christmas shopping, which is good of course, but the whole process in general just seems so stressful. LIke we are SO obligated to buy gifts! I guess its easy for me to say…I don’t have kids or a significant other and that would be hard to say no to buying for. But it just seems there is SO much emphasis on shopping as a necessity this time of year. Why can’t this be more like other holidays you just enjoy for the day. Hmmm I guess that’s never going to change so why bother complaining right? lol! Either way, those are all great tips! 🙂
Charge Now Pay Later – My Hardest Habbit to Break!
It’s crazy how you never seem to notice just where all that money goes and just how much you’re spending.
You continue to get better and add greater value. Thank you for what you do.