ROSELAND – The holidays are a joyous – and potentially expensive – time of year. In fact, according to a 2009 Consumer Reports survey, consumers said they planned on spending an average of $699 on gifts, but they admitted to actually shelling out an average of $811. However, gift giving doesn’t have to empty your wallet if you follow these simple tips from the New Jersey Society of CPAs:
If you’re going to lay out the $811 that the average consumer spent last year, you’ll see less of a bite out of your monthly budget if you divide that sum over the three months leading up to the holidays. Shopping ahead also allows you to develop careful plans about what you are going to buy, making it possible to avoid costly last-minute impulse purchases.
If you decide in advance how much you want to spend, and leave the house with that amount in your pocket, there’s no way you can overspend, as long as you use cash for all of your purchases. Leave your plastic at home, and commit to stop spending once you’ve spent your cash on hand.
Avoid Credit Card Sign-Up “Discounts”
When you’re making a purchase, have you ever been offered a 10- or 20-percent discount if you open a store credit card account immediately? You’ll probably be receiving many such offers during the holiday season. While they may be tempting, it’s best to avoid them. That’s because store credit cards often carry very high interest rates. If you amass a large balance, you may find yourself paying off interest charges that are much higher than any initial “discount” you receive.
Look into Layaway
When people don’t have enough cash to make a purchase they often turn to a credit card. This year, consider another option: layaway. In a layaway plan, you typically put down a percentage of the item’s total cost, then pay off a little each week until you’ve covered the full price. At that point, the item is yours, and you don’t typically incur any interest cost. Layaway also prevents you from buying things you can’t really afford, so you won’t be paying off your holiday impulse spending well into the new year. To be sure you understand the process, ask for a written copy of the store’s layaway policy.
Watch Out for Warranties
When you purchase some items, particularly electronics, salespeople often urge you to buy an extended warranty that will cover necessary repairs or replacements down the road. Before agreeing, find out the total cost of the warranty. The deal you’re told will only cost a few dollars a month could end up costing hundreds of dollars over time once you add it up. It’s almost always a better idea to set aside the money you would have spent on a warranty in an emergency fund so that you can buy a replacement if necessary.
Shop Sales Now
Once the holiday season is over, stores immediately discount all of their seasonal merchandise, including gift wrap, greeting cards, decorations and more. Thus, it’s a great idea to extend your shopping past the holiday season and get everything you need for next year at sale prices. The 2011 shopping season is still a full year away, but you can already save money on some of the items you’ll need.
Turn To Your Local CPA
Are you seeking advice about smart ways to spend your money? Remember that your local CPA can help. He or she can help you make decisions about all the financial questions you face. If you don’t have a CPA, you can easily locate one online using the NJSCPA’s free, online Find-A-CPA service. Just go to www.findacpa.org, and in a few clicks you can locate a highly qualified professional who can assist you.
For more information on various personal financial matters, visit the NJSCPA’s public service website at www.MoneyMattersNJ.com. While visiting, you can subscribe to Your Money Matters, the NJSCPA’s free, monthly email.
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