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Holiday Shopping Tips

How to shop smart for the holidays to avoid a holiday debt hangover.

A holiday debt hangover is what you experience after you overcharge during the holiday shopping season. People often make the decision to ignore the bills and keep charging during the holidays to make the season special, with the thought that you’ll deal with the debt once the holidays are over. The hangover is the sinking feeling and vertigo you get once you realize the bills are so high.

Be Penny Wise, not Pound Foolish about holiday shopping.

Penny Wise shoppers plan ahead so they can enjoy the holidays, while Pound Foolish shoppers overspend and overstress. Because they fail to budget, costs go up and debt grows before the end of the year. They shop with friends, which increases the chances of impulse buys and shop tired or hungry, which leads to rash purchasing decisions.

Penny Wise makes a list before heading out to shop. And they take time to look for sales and comparison shop to get the best prices.

And while both Penny Wise and Pound Foolish may be out early on Thanksgiving and Black Friday, Penny Wise only hits the stores when it really counts to maximize shopping. Meanwhile Pound Foolish is out fighting over fad gifts that won’t stand the test of time. Penny Wise buys gifts that are meant to last, like clothes, appliances and electronics you need for school or work, and even practical gifts like tires.

Only Pound Foolish shoppers start shopping at the end of November or into December. Penny Wise shops year-round, buying one big item per month to spread out the cost. And they buy universal gifts like digital picture frames whenever they go on sale. This way they have inexpensive last-minute holiday gifts to give out as needed.

The Pound Foolish just buy, buy, buy and don’t even bother to track their receipts. Penny Wise uses receipts to track spending, in case retailers offer a cost difference after the holidays. They also ask for gift receipts to include with gifts for easy returns.

When the Penny Wise shop online, they only shop secure sites to avoid identity theft, because you’d have to be Pound Foolish to add to your holiday stress with credit fraud.

Penny Wise also knows how to save big on holiday meals. They plan meals carefully based on the number of attendees and how much everyone can eat. They also buy nonperishables in bulk because they can save up to 20 percent. Pound Foolish makes enough food to feed an army instead of a dinner party. And they don’t use leftovers, so much of what they cook gets tossed in the trash.

Finally, Pound Foolish puts everything on credit because it’s easy and they might earn rewards. But Penny Wise uses cash and debit when possible and they plan ahead to pay off high interest rate credit card debt in the first billing cycle. Purchases that take more than one billing cycle to pay off go on a card with a low APR. So when Penny Wise uses credit cards, they use two AT MOST for holiday purchases, while Pound Foolish ends up with a holiday debt hangover.

Be Penny Wise and shop smart this holiday season. And if you start to feel any stress over holiday debt, call Consolidated Credit for help.

Additional resources to help you save during the holidays:

The following resources can also help you cut costs and save money during holiday shopping:

Why two credit cards MAX is right for the holidays

As we explained at the end of the video, Penny Wise shoppers either avoid credit entirely for the holidays so they don’t encounter any post-holiday problems with debt or they plan on use two credit cards, at most, for holiday spending.

  1. A rewards credit card you can pay off in-full. If you have a credit card that will earn rewards like cash back on holiday purchases, then you may choose to use this card strategically to earn those rewards. However, the balance should be paid in full at the end of every billing cycle or those rewards will be quickly offset by interest charges.
  2. A low APR credit card that you use for larger purchases. If you have a purchase that you know can’t be paid off in a single billing cycle, then you should put these purchases on a credit card with the lowest APR possible. This allows you to minimize total interest charges as you pay off the debt.
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