How to have Christmas on a limited budget.
Written by Matt Wegner Founder and Lead Counselor, Matt Wegner Financial Coaching, www.financialexcellence.net
‘Tis the season, and for most people ’tis the season to spend out of control and get over our heads in debt. This holiday season, I want you to look yourself in the mirror and ask yourself what your last name is. If your name isn’t Jones, maybe you should consider not trying to keep up with them! The Jones family sure looks like they are living the good life, but the truth is they are broke and in debt up to their eyeballs. The average family today makes $48,810 and has over $38,000 in debt. Normal is broke, overspent, and stressed out for the holidays. I challenge you to be weird this holiday season. Here are a few money saving tips for the holidays.
- Spend within your means. This sounds like a no-brainer, but too many people have a hard time understanding this one. You need to have a plan for your money every month. If you don’t plan out the month, you will wind up not knowing how much to spend on different categories. Pretty soon you use the credit card because you’re not sure if you have enough for gifts, groceries, etc. Once you start using the credit card, it’s too easy to keep spending.
- Pay cash. Visa wants you to believe you can’t live without them, but I’d like to suggest that you really can’t live with them. On average, people who shop with their credit card spend 12% to 18% more than if they pay with cash. When you have cash in your hands it is much harder to overspend than with the plastic. Plus, 78% of Americans do not pay their credit card balances off each month. That means if you’re normal, you’re paying 18% interest on top of the 18% extra spending you’ve already done, just because you had to have it now. This assumes you pay your bills on time and don’t have any late fees. The bottom line: If you can’t afford to buy it with cash, you really can’t afford to buy it on credit.
- Decide on an amount for each gift recipient at the beginning of the year. Then help yourself stick to that amount by setting aside gift money each month in a cash envelope. This ensures your gift money is available all year long and allows you to take advantage of seasonal sales when they happen. If you haven’t been doing this all year, set a planned amount for each person and stay within that budget. It’s tempting to get that one item that will put you over budget, but sticking with the plan keeps your spending down, and that’s more important than feeling good for the moment.
- Negotiate prices. You would be amazed at how many retail items you can purchase for less than the marked price, if you just ask. If the salesperson doesn’t have the authority to lower the price, consider asking to speak with the manager. They may decline to negotiate, but you never know unless you ask. Is there a display model the salesperson is willing to part with for a lower price? Look for creative options.
- Offer personal gift certificates. Do you have a unique talent that you can use as a service to the gift recipient? If you have a lawn mower you can write a gift certificate good for mowing their lawn three times. If you are good with cars, offer to change their oil or rotate their tires for free. If you have young nieces or nephews, give them a ticket redeemable for one day to spend with you. With a little creativity there is no end to the possibilities here, and they are low cost options.
- Consider shopping at thrift stores, online auctions or in the classified ads. If you shop regularly you can find brand new items for pennies on the dollar.
- Take advantage of off-season closeouts and clearance sales to save up to 70% or more. Summer items are on sale right now at steep discounts. You can save a lot of money or buy a lot more with the same budget by shopping the clearance aisles.
Keep in mind the real reason for the Holidays. Contentment goes a long way with everything in life. I’ve heard it said that the happiest people don’t have everything they want. They want everything they have. When you combine contentment with the true reason for the season, your perspective changes and it’s suddenly not so important to keep up with the Jones family or out-do yourself this year. The simple things in life bring the greatest pleasure. Keep your holiday shopping simple this year, and you too will experience the greatest pleasure.
Matt Wegner is a personal finance, career, small business and leadership coach focused on teaching his clients the tools for L.I.F.E. (Living In Financial Excellence). Learn more about Matt at www.financialexcellence.net