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Bracing your budget for next year’s holiday shopping

The season of gift giving always seems to sneak up on us. While scouring through newspaper ads, price-checking across the web, taking advantage of Black Friday and Cyber Monday sales may sound like fun to you, all that holiday spending could be a pain in your budget.

Here are some tips to prepare for your holiday shopping spree:

1. Save year-round

Start by grabbing last year’s receipts (or making a list of estimates) to determine how much you spent on holiday gifts. Then, divide that amount by the number of months you have to save between now and next holiday season. Put that dollar amount away each month in a savings account, where it can earn dividends.

Pre-holiday saving helps you to avoid charging everything on your credit cards. Or, if you like using your credit cards to earn rewards points or discounts, your pre-holiday saving allows you to pay off your card balance right away and avoid interest charges.

2. Use department store credit cards wisely

While the discount offers of department store’s credit cards may seem attractive, the stores and banks financing these cards are counting on you to not pay off the balance. Many store cards carry interest rates up to 29.99% APR! At those rates, the 10% you may have saved on your original purchase will disappear if you don’t pay off the credit card balance quickly. In fact, you could end up paying several times the original price if you only pay the minimum amount due each month.

If you must use a credit card, choose one with the lowest possible interest rate, to save on accrued interest charges in the long run.

3. Plan your purchases

If possible, decide in advance what you’re buying for everyone. Then, research stores and pricing — especially online, where you might receive additional discounts and free shipping (not to mention, saving gas and avoiding the crowds!). Use tools such as Google’s “Shopping” search option to compare prices at various online retailers. This can help you get the lowest price, rather than settling for an amount in-store. Some retailers will price-match, but may ask you to verify the competitor’s price before discounting the cost.

For more simple solutions on how to plan ahead and make your holiday shopping simpler, visit http://www.stcumoney.org.

 

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