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Debt Management

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Holidays

Holiday Season no time to let go of purse strings

BY DEBORAH ALEXANDER
WORLD-HERALD STAFF WRITER
Thrusday, December 11, 2003

The holiday season is in full swing, and with improved economic indicators and growing consumer confidence, retailers hope shoppers will spend, spend, spend in the days leading up to Christmas.

However, nearly 58 percent of the respondents to a recent survey by Consolidated Credit Counseling Services Inc., said they plan to spend less this year than last year. Of those, 67 percent said they were cutting back because they already had too much debt.

Dr. John E. Bartholet of Omaha will pay cash for the gifts he buys.

Bartholet, 30, a chiropractor who opened his practice a year ago in the Old Market, said he has almost paid off the credit cards he used while attending college and chiropractic school.

"I lived on credit cards," he said. To make the most of his holiday budget of about $600, Bartholet carefully plans his purchases and reviews the Sunday newspaper for gift ideas.

Bartholet's advice during the holidays - "Have a budget and try to pay cash for everything."

Consumer and credit counseling experts say Bartholet's plan is a good example to follow. Just like Santa, who checks his gift list at least twice, consumers need a list and a budget to avoid overspending.

Those already in debt should stop using their credit cards and start living on cash, said April Lewis-Parks, director of education for Consolidated Credit Counseling Services, which is based in Fort Lauderdale, Fla.

In 2002, the average American household had $8,940 in credit card debt, Lewis-Parks said. As a nation, Americans owed $712 billion in revolving, or credit card, accounts in 2002, according to the Federal Reserve Board.
Getting out of the red at Christmas
Want to enjoy a debt-free holiday season? Here are some tips:

Make a list of the people for whom you want to buy gifts and find out what they would like.

Prepare a budget and stick to it.

Comparison-shop by reviewing newspaper ads, online Web sites and catalogs to find the best deals.

Pay with cash, spend only the money you have.

If you must use a credit card, use one with a low interest rate and no annual fee.

Avoid impulse shopping, stay away from trendy items.

Consider giving gifts that cost little or no money. Create coupon books for free baby-sitting, cleaning the house or back rubs.

Sources: Mary Lynn Reiser, associate director, University of Nebraska at Omaha Center for Economic Education, and the Holiday Survival Guide by Consolidated Credit Counseling Services at consolidatedcredit.org.

Lewis-Parks said consumers should track their spending and carefully prepare a budget that includes fixed and flexible expenses. They also should transfer balances from credit cards with high interest rates to one card with a low interest rate. 

That advice applies year round, Lewis-Parks said. "These are things consumers need to be conscious of if they have a debt situation."

Whether consumers shop in stores, online or from catalogs, they should have a budget and a list and do their research, said Mary Lynn Reiser, the associate director of the Center for Economic Education at the University of Nebraska at Omaha's College of Business.

For the best deals, consumers should comparison-shop. "There is a lot of competition among the stores in the Omaha area this holiday season," Reiser said.

Consumers also should weigh sales promotions, such as offers for a $10 gift card for spending $100 or buying two items to get one for free. If your gift budget is $60, it doesn't pay to overspend by $40 to get a $10 gift card, she said.

"If you do the math, it isn't worth it," she said.

Promotions offering one free item if you buy a certain number could be a better deal, Reiser said. For example, it might pay if you're buying compact discs for several music listeners.

People should find out what gift recipients want, make a list and stick to it, she said, rather than randomly purchasing items that end up costing more than expected.

"Consumers should not shop on their emotion. They should use their heads," Reiser said.

Lewis-Parks, of the credit counseling service, advised consumers to consider the long-term value when giving or asking for a gift.

"Will it be remembered next year?" Lewis-Parks asked. "People generally remember the experience more than the gifts."

Instead of going into debt to buy lavish gifts, consider establishing holiday traditions that require little or no money, Lewis-Parks advised. Such activities may include family gatherings, or attending a tree-lighting ceremony or a community performance of holiday music.

Reiser agreed. Think of creative gift ideas such as homemade cookies or coupons for free baby-sitting, she said.

And people should admit to friends and family members if they are trying to get out of debt.

"You're not crossing anyone off a list," Reiser said. "People are understanding."