Money Traps to Avoid Over the Holidays
The holidays are almost upon us, and with them comes good food, good cheer and more than a little overspending as we rush about trying to find the perfect gifts for everyone on our lists. You may be one of those holiday shoppers that maxes out your credit cards and spends all of next year paying off those gifts.
To keep you from digging yourself into holiday shopping debt this year, we’ve gathered some of the best tips and tricks to protect you from those inevitable holiday money traps.
Trap No. 1: Shopping on Black Friday
We all wait with breathless anticipation for the release of those Black Friday flyers and the sales that they contain. For many people, taking advantage of those discounts is the best way to stretch their holiday dollar a little farther. Is it really the best savings option?
It can be, but you have to do your research. While a good majority of the sales on Black Friday are actually good deals, nearly 20 percent of items marked for sale on Black Friday or Cyber Monday are actually more expensive than their normal sale price!
- A stand mixer – Normal price: $280. Black Friday sale Price: $350
- Electric motocross bike – Normal price: $299. Black Friday sale price: $420
Those are only a couple of examples. There are plenty of great deals if you are shopping on a budget, but make sure you do a little research before you brave the crowds to make sure you are actually getting the best deal.
Trap No. 2: Drinking
What would the holidays be without a bit of spiked eggnog or a glass of champagne when the clock strikes midnight on New Year’s Eve? Drinking in moderation is OK, but there’s a fine line between moderation and excess and many of us toe that line, especially during the holidays.
The CDC defines heavy drinking for adults as more than 8 drinks a week for women, and more than 15 drinks a week for men. Even if we ignore the detrimental physical effects of alcohol on your body, drinking in excess can have a detrimental effect on your wallet as well.
If you do drink during the holiday season, try staying at home instead of going to a bar. This simple step can reduce the money you spend on alcohol by two-thirds or more, depending on what your poison of choice is.
Trap No. 3: New Credit Cards
Credit card companies know that the holiday season is when people spend the most money on credit during the year, and they try to cash in on that spending by offering holiday credit cards.
Don’t fall into this trap.
No matter how good the deal might look, you will eventually have to pay that money back, leaving you scrambling to factor that new credit card payment into a budget already badly stretched by the holiday season.
Additionally, these credit cards may have high interest rates. They may promise you a 0 percent APR, but it only applies during the promotional period and defers interest rather than waiving it.
Trap No. 4: Winging It
This is by far one of the biggest and most costly money traps that we encounter during the holidays. Instead of setting up a budget or even just a set spending limit, we browse the stores and buy whatever catches our fancy.
There are two easy ways to avoid this money trap:
- Make a list and check it twice. You’re not Santa so you don’t need to worry about who’s naughty or nice, but you should write a list of who you’re buying for, how much you’re willing to spend and a basic idea of what you want to buy.
- Set a budget! Once you have your list, set an overall spending limit and don’t exceed it.
Don’t think you’ll just stay in that budget if you don’t write it down. Make a point of doing all of your prep work first and it’ll be easier to prevent overspending.
Trap No. 5: Decking the Halls
Everyone loves having a fully decked house for the holidays, with everything from lights to ornaments and everything in between.
Stop right there!
Don’t buy your holiday decorations before Dec. 25. It may seem a little counterintuitive, but hear us out before you totally disregard this trap.
You can buy your holiday decorations for full price before Christmas day, or you can wait until Dec. 26 and get twice as much for the same price.
Most retailers mark their entire holiday inventory down by 50 percent as soon as it hits midnight on Dec. 26, so keep a list of everything you want to stock up on for next year, and go shopping guilt-free the day after Christmas.
Trap No. 6: Buying the Brand
Sometimes this trap is unavoidable, especially if you have a small child that just has to have the latest “Frozen” toy, but if you can postpone your purchases for a little bit, you can save a lot of money.
This is especially important for electronic purchases, because there are always new models hitting the market every few months. If a new tablet comes out just in time for the holiday season, you can bet the price will drop dramatically after the glitter has worn off and the wrapping paper has been crumpled up and thrown away.
If you can wait you can save quite a bit of money, but this does tend to be one of the hardest money traps to avoid during the holiday season. Retailers and manufacturers specifically wait until the holiday shopping season is in full swing before they release their new devices.
If you can avoid some of these common money traps, you may be able to reduce your holiday spending so you can start the New Year on the right foot instead of stressing about holiday debt.