Don’t be blue, stay out of the red on Black Friday

Undisciplined shoppers might ultimately feel blue over going into the red on Black Friday. Tempe investment experts offer sound strategic advice this week to avert a day of colorful language when the credit-card bills arrive in January. –wranglernews.com file photo

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By Alison Bailin Batz, Special for wranglernews.com

Throwing around the football on Thanksgiving morning and later sitting down for a big family meal are beloved holiday traditions.

But for many, the real annual tradition takes place the following day: Throwing around the credit cards while shopping on Black Friday.

Tempe investment advisers predict another robust spending spree on Black Friday, which might be great for retailers but might not always be the best thing for buyers.

Scott Aitken

“In 2020, the National Retail Federation reported holiday spending grew an unexpectedly high 8.3 percent over the same period in 2019 to $789.4 billion, exceeding the holiday forecast despite the economic challenges of the coronavirus pandemic,” said Scott Aitken, an independent investment advisor at Wilde Wealth Management Group in Tempe. “All signs point to numbers staying high this year, with stores continuing aggressive incentives coupled by Americans wanting to enjoy the holidays this year more than ever.”

But is the resulting debt really worth it?

“Unfortunately, it isn’t until after the New Year, when the credit-card bill arrives, that feelings of regret result,” said Anthony C. Williams, investment advisor representative at Mosaic Financial Associates in Tempe.

So, how can you avoid suffering from a debt hangover this season?

Build a budget – using real math

“Create a budget and stick with it,” Aitken said. “Before you start spending, do a little math and figure out how much you can afford.”

A general rule of thumb is the “1.5 rule.”

“Don’t spend more than 1.5 percent of your total gross income on holiday-related expenses. If you’re already in debt, consider spending less than one percent,” Aitken said.

Be creative – and picky

Not all gift recipients are created equal.

Anthony C. Williams

“Don’t stress about spending a ton of money on every single person in your life,” Williams said. “Start by making a list of people who might enjoy something homemade, rather than store bought, in fact.”

For those people – who might include co-workers, old friends or distant relatives – get creative with your family and bake them cookies or bring them a home-cooked meal.

Sweat the small stuff – and plan for it

Sure, there are people for whom you want to make the holiday extra special with extravagant gifts. Just don’t forget all the “other stuff” that goes along with those gifts.

“People often forget to budget for special wrapping paper, elaborate cards or even cute stocking stuffers they buy on a whim for those they love,” Williams said. “Those little extras can add up to hundreds – even thousands – of extra dollars, not to mention the bottle of wine here or hostess gift there bought to bring to holiday parties every weekend.”

Williams recommends making a list of all holiday-related parties, open houses and even work functions, – and including all expenses involved with each to the overarching holiday-spending budget.

Cash before credit

Simply put, don’t spend money you don’t have.

“And if you can’t trust yourself, why not avoid unnecessary and impulsive purchases by leaving the credit cards at home when shopping?” Aitken said. “Then, you are disciplining yourself to truly only use cash or a debit card, even on an impulse buy.”

Just say no – to store-branded credit cards

Similarly, resist the temptation to sign up for store credit cards.

“The low introductory interest rates may seem enticing, but that rate will expire–and sooner than you think,” Williams said.

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