Credit Guidance for Charge-Aholics
Teresa Pitts spends her free time haunting discount stores for inexpensive items for gift baskets--and then explaining how to make them to dozens of anxious consumers. Dara Duguay shuttles from company to company--talking about restraint and leaving a flurry of shopping tips and holiday budgets in her wake. Merriott Terry asks consumers to list the 10 things they most want--and the 10 things they most want to avoid this holiday season--and then shows them how to do it all on a tight budget.
The 1995 holiday season is keeping these and other credit counselors on their toes. Consumers walked into the holidays supporting a staggering $384 billion in credit card debt--nearly 14% more than last year, said Ruth Susswein, executive director of Bankcard Holders of America.
The statistics beg restraint, yet at this time of year, restraint is hard to come by. Indeed, only 75% of Americans bother to set a holiday budget at all--and fully 56% of those who do have a budget expect to exceed it, according to a recent survey by American Express.
“It just gets worse every year,” said Duguay as she was preparing to give a talk to Gas Co. employees in downtown Los Angeles.
Added Terry, a Houston-based credit counselor: “We know that the average consumer in Houston is $2,000 to $3,000 more in debt than they were last year, so we are trying to be proactive. We are trying to help people plan, instead of just waiting for them to come see us in January.”
Even those who have mended their ways get nervous this time of year. Just ask Martha Rice-Horsfield, a Los Angeles teacher and reformed charge-aholic.
“This time of year is always hard,” she said. “You get caught up in it when you go to the mall and see all these things that you want to buy for people. And then there’s the cards and the decorations. Last Christmas was the first time we didn’t go crazy.”
Rice-Horsfield, who said she is pacing herself and only using cash, is whittling down the $10,000 she ran up in credit card debts from her free-spending days.
What can you do to keep your New Year prospects from being darkened by the shadow of holiday overspending? Here are some hints from the credit counselors:
* Consider your priorities. One of the first things that Dara Duguay does when conducting a credit counseling session is ask attendees to fill out a questionnaire that discusses the things that are most important to them during the holidays. Is it to spend time with family? Go to parties? See old friends? Or is it most important to give and receive gifts?
* Make a list. Before you set foot in a store, you should already have a plan on how much you will spend on each person on your list. Stick to it.
* Consider “free” gifts. There may be several people on your list who would like to receive a service rather than a gift, Pitts says. For instance, young couples with children may prefer a night out--sans offspring--to all the gifts in Nordstrom. Or make a certificate that’s good for a family meal, prepared and brought to their home. For kids: a certificate that’s good for the cancellation of one punishment. “That’s really popular,” Pitts said. “It doesn’t mean that much when they get it, but when they pull it out to use it, you know they just love it.”
* Choose a card. If you know you will not be able to pay off all the holiday gifts immediately, choose the credit card or cards that you will use carefully, said Susswein. Some have substantially lower rates than others.
* Check your cart. The biggest budget buster for many consumers is the “one gift for you, two for me” syndrome, Duguay said. Most people who get it start with good intentions: You’re in the store, diligently buying items on your list. Then suddenly you happen by the rack of formals and think, “I really do need a new holiday dress.” The next thing you know, you’re off and charging. And way off budget. The answer: Simply check the cart before you check out of the store. Any item that’s not on the list needs to be reconsidered. If you simply can’t part with it, ask to put it on hold. Then think about it later, when you’re not in the mall.
* When you’re done, stop shopping. If you come back to the malls for social reasons or to visit Santa, don’t take your credit cards.
