How to Spend Smart and Avoid Credit Card Holiday Debt

Thanksgiving shopping is cooked.

Black Friday is history (and made history).

Cyber Monday is ongoing for some retailers all this week, but the actual day has come and gone to record sales and spending online for shoppers who value convenience.

But are you really done shopping? Are those days the only ones you’ll have dedicated to spending for the holidays.

Even though the two most lucrative holiday shopping days, from a sales and discount perspective have ended, that doesn’t mean you’ve concluded your shopping for this season.

In fact, you might just be getting warmed up for December.

When you consider how successful the Thanksgiving weekend was, how much the average consumer spent and the amount and volume of online shopping, chances are you’re a little lighter in the bank account department.

Records were broken across the board, aside from how much was spent per person.

The average spent in that five-day window was just over $300 per person (roughly $313.29), which was slightly down from last year’s $335.47; Approximately, $217.37 or 69 percent was spent on actual gifts with ages 35-44 spending the most at around $413.^[1]

The same report shows that 89 million people shopped online and in stores, suggesting that the multi-faceted approach to getting the attention of consumers worked through both mediums, and that 89 million is up 40 percent from last year, and the consumer who used online and in-store approach, both, spent $93 more on average than the person who only chose one method of buying.

While fewer people shopped, Cyber Monday became the biggest online shopping day in the history of the United States with nearly 8 billion in sales; technology and convenience once again played key roles for that record-breaking number with 20 percent of the total sales on Cyber Monday came from smart phones or mobile ordering.^[2]

Black Friday hardly was outdone by Cyber Monday, and had a strong showing as well this year, with a little over 4 billion dollar spent on Black Friday, an increase of 23 percent versus 2017, and that was only as of 8 p.m. on Black Friday.^[3]

Another report showed that Black Friday had more than 6 billion spent online alone, with nearly 4 billion spent online on Thanksgiving, suggesting again that the smart phone, internet online shopping route is wildly more popular than the brick-and-mortar store approach; with 42 percent of consumers hitting department stores as the most popular in-store approach, followed by online retailers at 38 percent and apparel retailers at 32 percent.^[4]

And as much money that has been tossed around already, the one key statistic from that report is how much shopping the rest of America has left to do even after billions were spent on Thanksgiving weekend.

That same report said that only about 56 percent of all shoppers, whether that’s online or in stores, still haven’t finished their entire online shopping spree, with an astonishing 92 percent of the population feeling as though better or equal deals are still forthcoming as we roll into December and closer to Christmas, as an example.

Does that sound at all concerning to anyone? The fact that only 44 percent of the masses are done shopping, spending between $300 and $400 per person over a five-day period, with more to be purchased and bought would suggest that one of two things are occurring.

The first alludes to the general population having more disposable income this year, more feelings as though the economy and job front is good that they don’t mind spending more, but are doing so with their own money, cash in hand.

The second thought, and easily the more concerning, is credit cards and debt are running rampant this holiday season, with consumers justifying the purchases because it’s the “holidays” and that means you spend what you don’t have or, again, that the economy and job market makes them feel stable, so a little debt never hurt anyone.

The debt piece isn’t the way you want to approach the holidays, even if you’re feeling good about where the country stands, economically speaking.

Adding unnecessarily debt means high interest rates come the bill in January, and having to look deeper into your pockets and perhaps rework a home budget that is already tight.

Then again, if you’re not implementing or have implemented a holiday budget, that’s even more of a problem, along with added debt.

Avoiding that at all costs is paramount, even though you’ll probably have to pull back the reigns Santa style on that spending, but doing so might make for a happier new year, filled with better decision making and less to pay back.

Here’s how to avoid holiday debt as you move past the Thanksgiving shopping weekend and into prime December real estate when spending is equally high:

Prime Day: Pick your shopping days carefully in December for best deals possible

Certain days in December, much like Black Friday and Cyber Monday, speak to consumers better than others.

A recent study showed that you can pick and choose the best days based on research and saving more in December.

Based on nearly 10 years of data, you should be following a schedule of buying in December that has HDTV’s being purchased between December 8 and 10; Fitness supplies on and around December 10; Laptops go low on and around December 13, and kitchen appliances are December 15 and toys on December 16.^[5]

While this is suggested data, you also have to be smart about paying attention to sales that get closer to the actual holiday day itself, such as sales the final week of the holidays. Retailers are anxious to continue a strong sales push in the 4th quarter, so you’d be surprised how many stores, both online and in store, are ready to push even harder as December 25 rolls around this, and every year.

Don’t forget too about Super Saturday, known as the last day of shopping on the weekend before Christmas Day, this year falling on December 22. Super Saturday typically has more than half of Americans shopping on that day for good to great deals, comparable to Black Friday and Cyber Monday.

In previous years, about 53 percent of consumers or around 126 million shop on Super Saturday, and retailers recognize this and offer equally strong discounts.

Set a holiday budget, and stick with it. Really.

This advice might seem obvious, but when you crunch the numbers, you’d be hard pressed to believe that most Americans have any sort of budget for the holidays.

So the facts read like the ultimate optimism meets falling woefully short of that mentality.

Approximately 65 percent of shoppers set a holiday budget, with 77 percent going over it, and only 37 percent having an idea of how they’ll budget after they overspend in order to make up lost ground, financially, with about 15 percent of those individuals who go over budget will do so by more than $100 and as much as $250.^[6]

Sometimes, you get caught up in the holiday and Christmas cheer moment, and that creates shopping and spending in a vacuum, when often you need to be reminded of just how long even a $1,000 will take to pay back.

A minimum payment of $25 every month on a $1,000 bill means you’ll be paying that bill until 2023, and when you consider that last August, 2017, we hit more than 1.021 trillion dollars in credit card debt (the highest in the history of the United States), you’d believe that spending is a problem, and that debt of a mere $1,000 means you’ll have it for more than five years.^[7]

And keep in mind, if you shrug your shoulders at the idea of taking on debt, consider that the five years it takes you to pay it off means you’ll have to either take on debt every year around the holidays thereafter or come up with the money out of your own pocket next year and every year to avoid adding that same $1,000 every year.

While having a holiday budge sounds as though you’re being a bit of a “grinch” consider that you’ll also be preserving interest rates above 15 percent on average and assuming more debt that could preclude you from even bigger, more important purchases, in the near future.

Trying being creative and doing a “grab bag” or whittling down your list

Let’s say you’ve already hit the stores hard, and bought gifts for your kids, your partner and significant other, the parents and maybe even grandparents, but the rest of your list includes aunts, uncles, neighbors, friends and even the mail carrier in your neighborhood.

Chances are you’re like most shoppers and you want to please plenty on your wish list, and that also means you’re overextending that list beyond what would be considered feasible financially.

Also, if you’re one of many shoppers who use the discounts and deals for the holidays on yourself, that’s also counterproductive unless it’s an absolute “need” such as a new fridge or washing machine, laptop or other productive purchases that you’ve waited on until you can get a better deal.

Studies from 2016 show that more than 50 percent (58 percent) use the holidays as an excuse to spend on themselves first.^[8]

Consider that if you’ve already bought and completed your holiday shopping list and want to hit the stores in December looking out for number one, that’s additional spending you simply don’t need.

If all else fails, you should abide by the 1 percent rule that states if you’re looking to spend for the holidays, you should spend only 1 percent of your total gross income.^[9]

That means if you’re making $50,000 per year, that’s $500 for the holidays, so overspending and totaling a few thousand is putting your much further behind that you might think.

The fact remains is that most shoppers regress in their thinking, financially speaking, when it comes to how they spend money over the holidays. They justify, rather than think clearly. They get wrapped up in the presents and gift giving, rather than thinking long term about how they’re going to pay for the holiday after the dust has settled and the bills are due.

If last year is any indication, shoppers aren’t of the belief that debt and the holidays are a bad thing.

In 2017, an average of $1,054 was amassed in debt to pay for holiday gift-giving, and that’s up 5 percent, on top of the fact that most of that debt was on higher-interest credit cards more so than anything else.^[10]

Happy New Year won’t mean all that much if you’re spending most of January sifting through the rubble that was a rough holiday shopping binge that put you further behind that you already may have been, money wise.