Tag Archives: christmas spending

Christmas Weight, Bills, Spending, and “Stuff”

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On average we gain seven pounds (three kg) between Halloween and New Years. I wonder if we don’t lose a thousand bucks on Christmas stuff. Then, according to fitness experts, it takes us an average of five months to lose that weight. Well, according to financial studies it takes even longer to get the Christmas spending paid back: It takes until June on average.

But every year I’m reminded that most of what we buy, not just at Christmas time, is just “stuff.” And that’s not what Christmas is, or should be all about.

A few years ago, after decades in our family home, my parents could no longer handle the physical upkeep of a large single family home. It turned out that the trauma of selling our family home wasn’t nearly as bad as what us “kids”, now middle aged ourselves, had to do in order to make it happen.

 One Friday we ordered one of the big commercial dumpster bins to be delivered to the house. After giving away stuff  that our family members, friends and neighbours wanted, we knew there’d still be a lot of things that had to be thrown out: From sleeping bags to tools, furniture to books, and extra dishes to everything else, none of these could go into a one bedroom nursing home unit. What we weren’t prepared for was the visual impact of a huge and full bin being hauled away, then a second bin, and even a third bin. In total, the stuff accumulated added up to over 14,000 pounds – in the dump. Few things in life have had such a powerful and visual impact on us.

 Literally hundreds of thousands of dollars of stuff, purchased one at a time, over a lifetime, ended up as 14,000 pounds of trash. It sure put things into perspective. You’ll now understand why I’m just not that excited about buying that newest whatever, the next model of some gadget or another, or running up my credit cards. (Money Tools & Rules excerpt page 216)

Where Does Our Money Go?

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Cash slips through the pockets of Americans each day, and by the end of the week memory fades. There’s no reason to think it’s any different for us Canadians. A survey found that 48% of Americans suffer from “mystery spending.” The VISA USA survey found that Americans lose track on average of $2,340 annually.

Nearly half of consumers say they can’t account for more than one-third of their cash (for the few people who still use “real” cash) spending an average of $120 in a typical week, but losing track of $45. According to the survey, 7% lose track of $100 or more each week. One in five people who admit to misplacing more than $25 in cash per week say their mystery spending is “out of control,” and 62% feel that “small cash purchases make it difficult to track spending.” Furthermore, 47% say that “mystery spending makes budgeting difficult.”

Those aged 34 and under – especially men – are the biggest mystery spenders losing track of an average of $3,078 per year. VISA obviously suggests that the cure for “mystery spending” is to put small transactions onto plastic.

The best laid plans can quickly go out the window starting this time of the year.

A study reported on our spending habits, and this one is a killer to our budget. At Christmas time half of all spending for others ends up being things we buy for ourselves. So for every $100 we average $50 bucks for ourselves! Be really aware of that, be honest with yourself, and just work your lists before you ever leave the house. That, along with a fixed amount of money per person – not the sky is the limit and NOT spending for yourself. Commit to not buying for yourself until Boxing day, or January – or better yet – not this season!

List everybody! If not on the list – it won’t be happening. If you want to take it to the full extent of the budget – write down the amount of money you’ll spend on each person – add them up then take the cash out of the bank. When you’re out of money – go home and stop spending. And don’t even think about leaving the house with your credit cards in your pocket. But it’s so cute and it’s on sale are NOT valid reasons for going over your budget.

If not, the financial hangover will last for months and months – it’s just not worth it.

Besides – gifts aren’t about the money – it’s the thought that counts. A well-thought out present that someone really values is way better than an expensive something they didn’t really want or need.

Your Wallet Can’t Afford Christmas In December This Year!

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Yes, you can still celebrate Christmas on the right day, but you need to know that your wallet can’t!

Traditionally, the big Christmas season sales have been around the week of US Thanksgiving. But that’s going to be much different this year. It’s something you need to adjust to if you’re not in the one-third of the population who leaves it until the last minute. That’s for three main reasons:

Shipping charges: With the huge increase in online shopping, the couriers are super busy already. Fedex doesn’t even have delivery guarantees anymore. Maybe your package will be on time, but most likely, it’ll be days late. What does that mean? Huge surcharges from all the couriers for this Christmas season. It’s an issue of supply and demand. So you need to be very careful when shopping online and check the shipping costs before clicking to buy. It may still be free and the retailer is absorbing it. But you may also see that many retailers are passing some or all of these costs on to you! Buyer beware and read before clicking! It’s also the reason retailers will have sales this October to pull forward a lot of their Christmas sales before the courier surcharges kick in.

Amazon Prime Day: Amazon’s massive Prime day has always been in June. This year it’s going to be in October – and that’s likely going to be a lot of early Christmas shopping on that day. That means other retailers need to adjust, because it’s just that big a deal.

Retailers need the income: Since March, retailers have been badly hurt in their sales – assuming they were even open. If there’s any reason to move up Christmas sales to generate some badly needed cashflow, they’ll be on board. Prime day and avoiding the Christmas season courier surcharges are just three of the reasons.

If your routine is to shop the last week before Christmas, your wallet is going to feel the pain this year!

A Few (Financial) Christmas Tips:

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Can’t buy me love: That’s the title of a Beatles song, but so many grandparents attempt to do that with their over the top Christmas spending on grandkids. Kids on average play with their new toy for 20 minutes…then revert back to their current favourites. So you’d just be buying 20 minutes and you’re in competition with other gifts anyway.

Try spending less, but better, and test the 20-minute theory: Buy or get a BIG box (at least 4 or 5 feet square) and put their gift inside that massive box. Then time it: What do they play with and how long….you’ll see that it’s likely days with the box, versus minutes for the gift and that the box will get used for building a fort, or a ton of other creative and fun things for something you got for free, or cost you three bucks tops!

Don’t be selfish: Christmas isn’t about you gifting yourself. Commit to buying for yourself only after your January credit card statement. That way you’ve given yourself a short ‘time-out,’ and get to see the balance on your first post Christmas credit card. News flash: The average person underestimates their credit card spending by 20%. The day after you see you December statement, you can go nuts for yourself…but I’m betting you won’t….

Avoid Boxing Day shopping: Electronics on sale that day will have the Boxing day price as the regular price within months. Other things like clothing, shoes, etc. will also be on sale the entire month of January when retail sales are pretty dead. And do you really want to line up for an hour to save two bucks on wrapping paper? Sorry – that won’t change your financial life. Stay home, enjoy your family time, and not the line-up time. Boxing day stress just drains the Christmas spirit out of you in a hurry…

If you’re an adult kid over 18 and not living at home: Your parents do NOT want your PRESENTS that you likely can’t afford anyway. They want your PRESENCE. Believe me when I tell you that your presence, that quality time with your parents, is the best gift and at an affordable price if you get your priorities straight.

Merry Christmas!!

Dear Retailer: I’m In Financial Trouble So You Won’t See Me Much This Christmas

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Dear Retailer:

I know that you’re really counting on me to spend a lot of money in your store this Christmas season, so I thought I should give you a heads up that I’m not going to be.

Media reports say I’m supposed to do my part in spending this holiday season. But I have to be honest and let you know that we’re no longer on the same financial page here. You see, for my family, reality is starting to set in. I’m broke. There, I’ve said it out loud. Now I’m going to start saying, “I can’t afford it” – a lot!

I’ve heard it said that often an alcoholic has to hit bottom before he or she will change their behavior. Financially, that’s pretty close to where I’m at. Myself, and the average person aren’t saving much, our debt keeps growing, 25% of us are cashing retirement money just to pay our regular bills, and it’s not like I can increase my income much in the coming year. My credit card balances are high, way too high, and I’m saddled with my car payment and my line of credit that seemed like a good idea at the time.

Right now I’m surviving and not thriving.

That leaves the one thing I can do, and that’s to look in the mirror and choose to make some different financial choices – some better financial choices. It starts with what I knew as a teenager: I can only spend the money I have – and I don’t have much left over at the end of each month. In fact, right now, if the truth were known, I’ve got a lot more month left after my money is gone.

The merry go-round is over and it has stopped being fun spending all that money I don’t have. I need to, and choose to, make Christmas more about Christmas and less about, well – your store and more stuff. Facing my financial reality has made me realize that all the stuff I’ve bought from you hasn’t gotten me any more happiness. In fact – it’s quite the opposite. It’s created a financial hell for me right now.

You want me to do more of what isn’t working in my life: more shopping, more debt, more instant credit and no payments for a year. But be honest: What do you care about my higher credit card balances, longer term car loans just so I can juggle all my payments, my exploding property taxes, utility bills, increase in food I do HAVE to buy, and the line of credit I needed just a few years ago?

You see, I no longer trust you. We’re not on the same page here. Your goal is to get me to spend as much as possible. If you want proof, it starts right at the cash register when you force your staff to push your credit card on me so I can save 10% today. But I’ve realized that the five bucks of savings today is costing me hundreds of dollars of interest since I can’t possibly afford to pay off my balance. And, according to a recent survey, two-thirds of us will still be paying that balance off a year later!

Your ads say I can “save” 20% – but I’m starting to realize all these savings are making me go broke. It’s the 80% I SPEND that’s killing me, and that I can’t ever “save” when I set foot in your store. Besides, by the time I pay off the stuff I’ve bought, even with the “savings,” I’ll have paid over double the amount on my credit card.

But right now all I can pay is the minimum monthly payments and sure wish I could live the words of that Rod Stewart song: “I wish that I knew what I know now, when I was younger.” So if you’re going to advertise with some of those “don’t pay for 14 months,” “best savings of the year” or “no-money-down” deals, I’m more likely to throw up than show up.

I know I’m accountable for my own actions, and financially I haven’t done a very good job. It’s as though I’ve been at a great party and had a little, OK a lot, too much to drink, and it’s now the morning after.  I am going to look after my financial needs in healthy and constructive ways. I am going to face it to replace it, instead of looking to spend my way out of it with more refinancing, another line of credit or cash advances.

The financial reality is that I’m in trouble and in a big hole. And when you’re in a hole, the first thing to do is to stop digging!

What I want most for Christmas this year is to get my financial house in order, to be able to sleep again without worrying whether I can make my payments next week or next month. I want to be able to not jump when the phone rings wondering if it’s about a collection issue. I want to look forward to getting my mail again, instead of dreading what bill is arriving today and I want to know, and not hope, that my family will still be able to afford to be in our home this time next year.

I’m going to start to do more of what my parents did: Work hard, pay off my debts and start saving my money. I didn’t – so far. Now I get to work like a dog because I’ve already lived like a king – with borrowed money, buying a lot of stuff from you in the past.

A $400 Raise & Six Ways to Go Broke This Christmas

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Wow! Someone at the radio station this weekly program is on just got a $400 raise! THAT is the greatest Christmas present to get, isn’t it? But he didn’t get it from his boss – he got it from and for himself. He just finished his last $272 car payment that had been around for six long years. Adding tax back (since all your payments are made with after-tax money) that’s $400 he’s no longer sending off each month.

He’s spent $29,000 gross income on a stupid car that isn’t worth a tenth of that today. If that car payment hadn’t been around, the same $272 a month for the last six years would now give him $25,000 in his bank account. Hmmm…out a net of $19,600 versus $25,000 that could have been his: That’s a $44,000 difference!

If he can suppress the “stupid” gene in all of us and keep driving the same car payment free, that $273 over six more years would have been $62,000. But the car financing was P.G. pre-George and I hope he’s now re-allocating that same amount to a savings account and paying cash for the next one.

And  from Dave Ramsey…. Six ways to go broke this Christmas season

Keeping up with the Jones…Newsflash: The Joneses are broke, too – it’s just that you don’t know it! The last thing you need is their debt load. Image isn’t everything.

Confuse toys with food: You NEED food, shelter, clothing and utilities. After that, it’s a want. Don’t confuse gifts and gadgets with necessities and remember the priorities in life – and in Christmas.

Presents for everyone: Newsflash: You can’t afford to give every third cousin in the family a present this year – or any year. Forget that sense of obligation and get real.

The store picks the present: The mall will eat you alive and spit you back out. Do not go without a list of people to buy for, the cash in your pocket, and a plan. Wandering around aimlessly for ideas will cost you a ton of extra money. All the specials and cool stuff will empty your wallet and fill your credit card statement in a hurry!

I’m number one: No, you’re not. It’s Christmas – the money you spend on yourself, even before Christmas, shouldn’t exceed what you’re spending on others. Make a rule for yourself: For every dollar you spend on yourself, another dollar goes to charities. It may help re-focus your priorities.

Christmas travel: Few things will speed you along the going broke plan than trying to fly a family of five to grandma for Christmas. It’s fine to travel, but make it reasonable. Besides, your grandparents are retired and THEY can afford to visit you if they want to!

The Money’s All Spent – Now What?

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Now that it’s the week after Christmas I’m reminded of an old Irish Rover Song called: Wasn’t that a party, and then talks about the hangover.

That’s kind of like our financial lives, having just spent over $22 billion on Christmas, mostly with borrowed money, and including lots of presents for ourselves. I know, I know, we work hard, it’s our money, we deserve something, it was on sale, we really needed it, etc. Well, if we were to be honest with ourselves, that’s all nonsense. Broke people can’t afford to buy stuff, and it’s almost always a “want” and not a “need.” That’s how we get to spending over $4.2 billion on impulse purchases in a year, according to one Canadian study. And, to be honest, that number is way low, because it’s the last thing we’ll admit to.

Yes, we work hard, and yes it’s our money. But do you want to keep working hard forever? Freedom 77 doesn’t have the same ring to it as that old commercial campaign of Freedom 55, does it? At some point in time, we do have to get away from the spending party and focus on paying off the hangover and saving something for someday down the road. Intellectually, we know that, but when are we actually going to get around to it is the big question that will change your entire financial life.

Right now, let’s be honest: We spend more time planning our vacation than we do our financial situation. Make 2012 the year that you’ll actually turn that around. Here are a couple of suggestions that are small enough where you’ll do it, but big enough to have a significant impact. Why small steps? Because our sub-conscious mind will revolt against huge goals that seem impossible to reach.

You’re not going to lose 60 lbs, but you can lose a pound a week. You won’t run the marathon this summer, but you can go for a 15 minute walk each day. You also won’t be debt free by February, but you can start on that journey with one step at a time.

Resolve to say no: Whether it’s to yourself when it comes to spending, to your kids, people at work, or anywhere else. It’s the one word that’ll change your financial life.

Take your credit cards out of your wallet: At least for January, leave the cards at home. If you have an emergency, you’re one call away from getting help. But going to the mall or charging this or that isn’t an emergency – honestly.

Set a cash limit: Pick an amount below which you’ll always always pay by cash or debit. The higher the limit, the better – if you make it $50, gas, small grocery purchases, lunch, etc., will all be paid cash. That alone will drastically reduce the charges on your credit card. When we use a credit card we spend 12 to 18% more – period. Whether you pay it in full or not, it’s still a ton of extra spending that isn’t helping.

Stop being financially stupid for 2012: You know exactly what that means. They are different things for all of us, but make the New Year one where you’ll stop doing the top two things that get you further in debt, or don’t grow your savings.

And finally, here’s a great post from Facebook this morning that kind of says it all: Do something today that your future self will thank you for.

The Money’s All Spent – Now What?

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Now that it’s the week after Christmas I’m reminded of an old Irish Rover Song called: Wasn’t that a party, and then talks about the hangover.

That’s kind of like our financial lives, having just spent over $22 billion on Christmas, mostly with borrowed money, and including lots of presents for ourselves. I know, I know, we work hard, it’s our money, we deserve something, it was on sale, we really needed it, etc. Well, if we were to be honest with ourselves, that’s all nonsense. Broke people can’t afford to buy stuff, and it’s almost always a “want” and not a “need.” That’s how we get to spending over $4.2 billion on impulse purchases in a year, according to one Canadian study. And, to be honest, that number is way low, because it’s the last thing we’ll admit to.

Yes, we work hard, and yes it’s our money. But do you want to keep working hard forever? Freedom 77 doesn’t have the same ring to it as that old commercial campaign of Freedom 55, does it? At some point in time, we do have to get away from the spending party and focus on paying off the hangover and saving something for someday down the road. Intellectually, we know that, but when are we actually going to get around to it is the big question that will change your entire financial life.

Right now, let’s be honest: We spend more time planning our vacation than we do our financial situation. Make 2012 the year that you’ll actually turn that around. Here are a couple of suggestions that are small enough where you’ll do it, but big enough to have a significant impact. Why small steps? Because our sub-conscious mind will revolt against huge goals that seem impossible to reach.

You’re not going to lose 60 lbs, but you can lose a pound a week. You won’t run the marathon this summer, but you can go for a 15 minute walk each day. You also won’t be debt free by February, but you can start on that journey with one step at a time.

Resolve to say no: Whether it’s to yourself when it comes to spending, to your kids, people at work, or anywhere else. It’s the one word that’ll change your financial life.

Take your credit cards out of your wallet: At least for January, leave the cards at home. If you have an emergency, you’re one call away from getting help. But going to the mall or charging this or that isn’t an emergency – honestly.

Set a cash limit: Pick an amount below which you’ll always always pay by cash or debit. The higher the limit, the better – if you make it $50, gas, small grocery purchases, lunch, etc., will all be paid cash. That alone will drastically reduce the charges on your credit card. When we use a credit card we spend 12 to 18% more – period. Whether you pay it in full or not, it’s still a ton of extra spending that isn’t helping.

Stop being financially stupid for 2012: You know exactly what that means. They are different things for all of us, but make the New Year one where you’ll stop doing the top two things that get you further in debt, or don’t grow your savings.

And finally, here’s a great post from Facebook this morning that kind of says it all: Do something today that your future self will thank you for.

Some Financial Christmas Presents For Yourself

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Ah, the week before Christmas. That means a lot of people should just about be at the stage where any logic, budgeting, or living within our means, goes out the window. It’s normally right about now that lots of us go nuts with our spending. Don’t do it – slow down, go to the bank and get some cash. Paying with $20 bills has a real money feeling, instead of just swiping away with plastic! And your wallet will thank you for it in January.

Presents are not what Christmas is all about, at least for us adults. If you think back, some of the most memorable gifts weren’t the expensive ones. Better yet, can you remember exactly what you got for gifts last year? And it’s certainly not a contest to see who can be the most irresponsible and spend the largest amount of money.

Gift cards: Remember what we talked about last month. Be careful. You’re parting with cash and getting an I.O.U. That merchant has to be in business when the person goes to use the I.O.U. It’s perfectly fine to give cash. There’s no expiry date, no fees, and no limitations. Just put a note in there that your financial advisor (that’d be me you can blame) suggested you care enough not to send a risky gift card.

We talked a couple of times this past year about internet security and hackers getting into people’s bank accounts and on-line transactions. Are you, or do you know, a high net-worth individual that does on-line banking or accesses their brokerage accounts? If so, one of the best presents is a small notebook computer that ONLY gets used for on-line banking. That way, there’s no chance for anyone to hack into it, as it doesn’t get used for anything else on the internet!

Did you know that the Salvation Army just announced that their annual Kettle Drive is now credit card ready? You can just swipe and donate. I’m pretty ambivalent about that. I love people donating to charities and helping others, but I’m not sure it needs to be on 20% credit cards.

Happy Boxing Day

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Today, and it should probably be Boxing day, too, don’t head back to the stores for anything other than food stuff. Last minute shopping and impulse purchases are huge financial killers. Today, just say no. You’ve done enough, bought enough and are enough. One more present isn’t going to impact your Christmas, honest!

You know Christmas is coming again next year, right? That’s not going to be a surprise. Just like your car insurance and money for a vacation. There are a few annual bills that seem to always catch us by surprise. But nothing is further from the truth. We know they’re coming! So make a decision to set up a separate savings account that’s not hooked up to your ATM card. Then either do it yourself, or ask your bank or credit union, to transfer over a fixed amount of money each month. It just needs to be one-twelfth of what these annual bills add up to so you have the money when they come due.

Lastly, there’s the biggest, best and most powerful Christmas present you can give to yourself and your family. It’s the gift of financial freedom. And it all starts with two simple steps:

Firstly to make the decision to be debt free and dream ahead a little of what that’d be like to have literally no bills to pay and nobody sucking huge amounts of interest and fees out of your income.

The second step it to sit down with your partner if you’re married. One hour with no television, no kids and no interruptions. All you need is an open mind and heart and a genuine conversation. I know, most people would rather talk about the weather and sex than their finances, but few conversations are more important.

Talk about your dreams and your finances in an honest and open way. Then get a piece of paper and write down your net income each month and every dollar that’s going out right now. Each dollar has to have a label on it before it gets spent.
The 2nd part is just to list your bills and debt. Because it can only get paid with what you have left over after food, shelter, clothing and transportation.

The game plan is to pay minimum payments on everything but the smallest debt. Then the next smallest one, and so on. You’d be amazed how quickly you get traction and a huge level of confidence.

The section in the It’s Your Money book walks you through it really simply. It’s worth it. You’re worth it, and one of the best gifts you can give yourself and your family.