Almost half of banks responding to a survey by the Federal Reserve said they were increasing interest rates.
Suffering not only from the recession, but also from the new restrictions mandated by Congress, banks are passing the buck—or rather, they are grabbing the bucks wherever they can find them by increasing interest rates to make ends meet.
With the holiday season fast approaching, this is bad news for consumers who turn to credit cards to finance their holiday shopping. To stave off compounding interest charges—and the holiday hangover that corresponds with mounting credit card bills, we suggest leaving the credit cards at home when headed to a mall. Instead, follow this plan:
- Make a budget for each person on your shopping list.
- Label envelopes with the names of each person for whom you are buying a present.
- Place the amount of cash appropriated for each person inside the respective envelope—no more and no less.
When purchasing a present, withdraw cash from the appropriate wallet. This method creates a psychological barrier to impulse shopping. If you are tempted to splurge on a gift—let’s say you are robbing from Peter’s envelope to buy a gift for Paul—you will be dissuaded when you realize you will need to withdraw money from another person’s wallet to cover the extra cost of the gift.
If you want a copy of my book, “Preventing the Credit Holiday Hangover,” submit a comment below with your best money saving technique. I’ll email the book out to you immediately!
We started doing using the take away gift exchange once the kids were old enough to participate. Gift can be anything; for a man, women or more netural. The first couple years everyone was afraid of taking away but now we have lots of fun to see who ends up with what. Afterwards we spend some time with a family game and just relax and enjoy. Every year we rotate who will be the host.
Instead of trying to buy gifts for every family member, try drawing names and set an amount to spend. In my family, each adult member makes a list and the spending amount is $100. No more or no less. This way everyone gets a gift they want without a lot of expense. Also, the parents buy for their own kids. It works great!
I’m a military dependent so I’m not afraid to use my discount. Do not be afraid to ask about special promotions and discounts , discounts for military, students, senior citizens, children, club memberships/business owners, etc. I had the manager of Chucky Cheese give me a huge discount, for $20 or less (this included food and drinks for 3 people and 2 cups full of tokens) for being first customer of the day. Ask to buy display shoes at store.
My wife & I make a list of those whom we gift & attach a value to each name. We then take cash & place it in an envelope along w/ the list from which we use to make the holiday purchases. (We’ll carry specific envelope(s) along so as not to carry around a lot of cash, but we refuse to use credit cards. We may purchase online w/ debit card & then refund bank account w/ cash. We also use this same technique for end of year charity giving.
I stopped using my credit and debit cards. I take out my cash for the week. That covers all persosnal expenses like food, gas for the car, haircuts, personal care products and the like. When that money is gone that is the end of spending for that week. I really think twice before spending. I don’t want to get to that point where I have no money.
My best shopping idea is to do no shopping at all. I stopped shopping for Christmas when my child was about eight years old. We talked about it and made the decision not spend money for just one day and it has worked well.
MY family and I decided we are not doing gifts this year. Talk with your family, especially if everyone is having a hard time this year, decide together. Maybe even do the white elephant type Christmas.
Each month, keep receipts of all purchases. Write out a list of all receipts. Then decides if you reallly need everything purchased. Don’t be afraid to return the things you don’t need.
Your message here…Negotiate a paycut (say 10%) with yourself, just as if your ‘boss’ had offered the ‘team’ a choice between a voluntary cut -or- a layoff. Learn to live on the ‘new’ income level while banking the difference in an ‘emergencies fund’. Never know? – it just might be prescient.
Your message here…Look for Buy 1 Get 1 free sales to buy two presents for the price of one.
Use you debit card and when out of cash, STOP shopping
Aleta – this is so simple, and right on. Make sure you don’t get hit with your banks overdraft fees… they are $35 per occurance for most banks! Ouch. Thanks for the post!
Your message here…I would take the envelope theory a step further. Start with an enevelope in January labeled Holiday cash. Figure out your “present” budget, divide by 12 and each month add that much money to the envelope. By December you have painlessly saved all you need for presents. At the same time you’re adding to your Holiday enevelope create a savings envelope and add an equal amount. Add it to a savings account for your own present….. a retirement fund.
For a while now I have been using gifts that give in several ways. At http://www.greatergood.com there are several gift shops related to free and fair market items. I look for the service pages, where you can buy schooling for 2 children in Guatamala or Afghanistan for $10.00, buy books for children in poverty stricken areas of the US, help communities with water, building supplies and a variety of other needs for a reasonable price outlay. I’ve started doing this since a lot of people I know really don’t need any more things, and a lot of other people in the world do, many selections are very reasonably priced, I can do it all online and get sent a certificate stating what the specific service is about to give to my family or friends. Everybody wins. My budget doesn’t fall apart in a store, I feel good about doing something useful, and so do the recipients of the certificates, knowing they are part of such cool work.
I paid $10 for dog food to feed street dogs in Mumbai, India for a friend who loves dogs, and gave him the certificate about it. It is still hanging on his refridgerator, a year later. This is something many people will really appreciate.
the site I use most frequently is http://www..greatergood.com. There is also Heifer International, Oxfam, and other service oriented organizations that provide similar opportunities. I recommend it for those you know who really don’t need anything, but would love to feel good about something.
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I like the idea of developing an envelope and limit for each person for whom you are buying a gift. We always list our family, friends, and neighbors and brainstorm something unique they would really enjoy or appreciate. Usually it’s a food-related gift: a special spice with a family recipe; a pint or quart jar of home bottled fruit, salsa, jam, relish or chutney; a small collection of special recipes for their favorite grain (quinoa, barley or farro)–you get the idea. We also brainstorm services we could provide for many of our neighbors: a night of babysitting with their children so that they can have an evening out; a coupon for 2 drives to medical appointments etcetera. Christmas is about service and gratitude. It’s not necessary to budget a lot of money for gifts.
I create a list of what I intend to purchase for each person, then I watch the circulars for sales, coupons, or money off with purchase such as $10 off a $25 purchase. You might be able to purchase two peoples gifts at the same time to utilize the dollars off. Also when purchasing gift cards some stores and resturants are offering a free gift card with purchase of a gift card.
I buy (or make) all gifts (or as many as possible; there may be 1 or 2 extra unplanned-for) throughout the year. Whether Christmas or birthday, if I buy when I see something that strikes my fancy or “has [-----'s] name on it”, I get it then. This takes a LOT of the urge to splurge out of my system, and is much easier to manage a little at a time rather than go broke or have a holiday debt-hangover! I don’t have any extra income just before Christmas, so why should I punish myself with extra debt and stress after Christmas? This is so much easier to work into a budget and there is nice merchandise available all year long. <
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If you set aside the dollar amount that you spend on people throughout the year (birthdays, graduations,etc..) Continue to use the envelopes. Buying these things after Christmas will allow you to get most of your gifts at a discount.
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Great tips, Phil. Thanks. One of the most important things to bear in mind that planning where your money is going beats trying to figure out where it went – everytime. Make a plan and stick to it. Like the scuba diver instructor said: “Plan the dive and dive the plan”.
Excellent tips to help individuals avoid the credit crunch over the holidays!
Your message here…we give a token gift on Christmas but the main gift is given on the birthday of each family member.This is the best for us because 1 Everyone gets there special day 2. We can spend more and stay on a budget without the pressure of spending.
The very best way to not suffer holiday spending blues is to make your holiday gift list for the next year right after Christmas. Carry this list with you and look at it before you go shopping all year. Buy gifts throughout the year and especially during sales. Set aside a small amount of money ($100) for gifts for someone special that is added to the list (like a apecial coworker0 – only spend it for that reason, otherwise save it. If you do this, holiday shopping is done without suddenly hitting your pocket book all at once, and the holidays become much less stressful. Wrap, label and keep the gifts all in one location.
Your advice makes so much sense, and it is a very practical way to stick to it for a person who has no other discipline!
This works great! My family for years’ now make the decision in the month of November – usually on Thanksgiving when all together – for each household to donate to a charity of their choice OR for the adults to all draw a name of another adult member of the family and we purchase for the adult whos name we selected. To add to the fun we keep it anonymous until Christmas (kind of like Secret Santa).The kids are all bought for as normal. We set a dollar amount on the gift that it can not exceed. Whats really fun is each adult writes a Dear Santa Wish List which we all receive a copie of. You get to learn something new about your family members that way. Some try real hard to figure out who has who which adds to the excitement. Whats nice is each year the lists all start with a wish for peace, love, good health and happiness; next, a wish for a donation in any amount to be made to …, then a few other suggestions are added to aide the gift giver in their selection. They may decide to gift from the list or have a wonderful idea of their own. Either way we have a ball with it and it saves everyone a great deal of time, stress in buying for all adults, and not to mention the money savings.
I think that it’s a really great idea even for when the economy isn’t bad. I wonder how many people actually have any room left on their credit cards because of the economy.
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Buy my hand puppets for your holiday gifts. They are fun and only $6.00. Go to http://www.manomascots.com
Put in $5.00 for everyone who you were going to buy presents for and donate it to your favorite charity in their names. They get to feel good and you get a tax break!
When eating out (whether fast food or fine dining), drink regular tap water. Sodas, iced tea, etc…add a lot to the bill and water is better for you anyway!
Compliment yourself for your more cost effective solution to your gift giving need. For example giving a diamond neckace (only costs one diamond) vs a pair of earings (two diamonds). It’s still only one fabulous gift… and it costs half as much.
If you’re buying presents for people at work, or non-family members, a good way to set a budget and stick to it is to simply get that group of people gift cards with a uniform set limit across the board (say $20-30). That way when you’re in the store looking around, you won’t be tempted to buy the more expensive item since you’ve already set the limit and stuck to it. Besides, no one would want you to go broke for them over Christmas and the holidays, most of all you.