’Tis the season, or at least the season is quickly approaching. It’s a time we look forward to, a time for gathering with family and friends. We will travel, we will attend holiday parties, and we will buy gifts for those we care most about. To help us pay for all this holiday spirit, we will no doubt use those plastic cards in our wallets, or their smartphone equivalents. Either way, it creates debt. And once January rolls around and the holidays are behind us, the spending may leave us feeling a little taxed, emotionally, mentally, and financially. This time of the year, we don’t want to be thinking about our finances; we want to be in that holiday spirit and not think of ourselves as scrooges. For some, that has come to mean equating the value of a gift we give someone with the love we have for that person. And for many, this will mean taking on debt.
With some forethought and planning, debt doesn’t have to be part of the holidays and can likely be avoided, or at least greatly minimized. First, the forethought: We need to acknowledge and accept that the value of a gift and the amount we care for someone in our lives have nothing in common. A thoughtful gift that reflects a person’s personality can be so much more meaningful.
Next, the planning. Create a list of the people in your life that you would like to honor this holiday season. It’s okay to play favorites here; only you are going to see the list. (It’s also okay if some don’t make the cut.) Next, really give some thought to each of the people on your list: What is it that really brings them joy? Then, as boring and as unnecessary as this might sound, create a holiday budget and give each person on your list an approximate dollar amount. Think of the list as nothing more than a tool, and again, only you will see it. What this tool is going to help you do is get the thing that you need, and, more importantly, not make the impulse buy.
Armed with a comprehensive list, it’s time to find those thoughtful gifts. Think about shopping right here in Truckee and North Tahoe and making that double-impact purchase, supporting local business and finding that unique gift that can’t be purchased online. Cassie Hebel with the Truckee Downtown Merchants Association suggests taking advantage of the first two weeks in December to visit your favorite shops downtown and throughout Truckee and North Tahoe. By doing so, you’ll avoid the last-minute crowds and you will have a wider selection of products. In addition, you’ll avoid shipping charges.
To make even more of an impact with your gift purchases, check out local events, such as the Soroptimist of Truckee Donner’s Soroptishop Holiday Artisan Faire. Support a local nonprofit, support local artisans, and find a one-of-a -kind gift. The event is Nov. 17 from 5:30 to 8:30 p.m. at the Truckee Community Recreation Center.
Once those gift purchases are checked off, keep in mind, those are not the only expenses we have during the holidays. We may be traveling to see family and friends who live outside the area. On the other hand, family and friends might be coming to visit us in Tahoe. Hosting and entertaining add up quickly. Then there are always the holiday parties where bringing a little something for the host is always a nice gesture. Think about these other expenses and add to your list so there is some foresight into what expenses might be.
So, you made your list, you plan to shop early and local, and even with all this planning, the use of a credit card is likely unavoidable if for no other reason than ease and convenience. If you foresee yourself using a credit card, here are some reminders to help keep that debt to a minimum and have it paid back as soon as possible. Between now and the time you of your payment due date, save as much of your gift budget as possible. Begin by trying to cut $1 of gift expense from somewhere else in your life. When it comes to our finances, we all have leakage, and you will be surprised at the potential savings you might find. If that doesn’t quite put you over the finish line, continue with this exercise after the holidays until the debt is paid back. Since you’re using a credit card, select one that offers reward points; those certainly add up over time. Whatever you do, don’t use those convenience checks that arrive in the mail from time to time. Even though the charge will go against the card, there is likely a hefty transaction fee. Keep in mind, if you pay your balance off in full, you won’t be paying any interest. And lastly, keep track of the debt that is accumulating and stick to a plan for paying that back once the holidays pass.
This article is meant to be general in nature and should not be construed as investment or financial advice related to your personal situation. Please consult your financial advisor prior to making financial decisions.
~ John Manocchio (CA Insurance Lic# 0H73423) is an investment adviser representative with Commonwealth Financial Network, Member FINRA/SIPC. Contact him at Pacific Crest Wealth Planning, firstname.lastname@example.org or (530) 562-5250.