Planning can help avert holiday debt hangover
Tammy Famularo, a mother of four who lives in Torrance, says she’s got too many kids not to take advantage of every money-saving opportunity this time of year.
So when she buys food for holiday gatherings, she uses coupons. When she buys gifts, she uses her Auto Club card at merchants that provide discounts to club members.
“A lot of people don’t take advantage of discounts because they don’t know about them and they don’t pay attention,” she said. “But you can save a fair amount of money if you pay attention. And I’ve got four kids, so I pay attention.”
Taking a few extra minutes to plan, bargain hunt and budget is worthwhile at this time of year, experts say. The average American family is expected to spend $500 to $1,000 on holiday gifts. That’s enough to force many families to borrow, creating a debt hangover that can last for years.
“Anything you can do to give a gift that you’re happy with and will please the recipient -- but not put you in debt -- is important,” said Mary Hunt, editor of Debt-Proof Living, a website and newsletter based in Paramount.
Tips for making it through the holidays economically whole:
* Make a list. One of the biggest mistakes consumers make is to head to the mall without a clear idea of what they need to buy, experts say. That leads to impulse purchases and overspending.
Make a list of whom you’re buying for, what they’d want and roughly what it costs. Then figure out whether that’s a gift list you can afford. If it’s not, modify the list until you’ve got one you can afford. The rule of thumb: December’s gifts should be paid off before the end of March.
* Comparison shop online. Before driving to the mall, check prices on the Web -- particularly for big-ticket items. Comparison sites such as Shopping.com will give you a range of prices available online for a product, which can be a useful guide even if you plan to do your buying at local stores. If an online merchant offering a good deal has a store in your area, call ahead to make sure the price is the same and the product is in stock.
Buying online can work too, as long as the shipping fees don’t exceed whatever you save by getting a lower price and not paying for gasoline to drive to the mall.
* Use coupons and discounts. Famularo doesn’t change her shopping list -- she just checks to see whether the items she wants can be had for less with a coupon, a sale or a discount. Last year when she bought gift certificates from Casual Corner, her Automobile Club of Southern California membership scored her a 5% discount, she said.
The club’s travel-related discounts are well known, but it also negotiates 5% discounts on gift cards from major retailers such as Barnes & Noble, KB Toys, Lands’ End and Sears. Flower delivery service FTD offers Auto Club members a 20% price cut, and Hasbro and Hickory Farms each offer a 15% break.
Famularo also checks online for grocery coupons before she shops for holiday meals. She figures using coupons and discounts year-round saves her about $2,000 annually.
The saving on holiday shopping isn’t huge, she said, but “it takes a little of the edge off.”
Hunt says that if you’re planning to give your baby-sitter or newspaper carrier movie tickets for the holidays, those, too, can be had for 30% to 40% off -- if you’re willing to buy in bulk.
Regal Entertainment Group, which operates the Regal, United Artists and Edwards Cinema chains, sells “premier super saver” tickets for $7 instead of the $10 adult price at the box office. But there’s a catch: You’ve got to buy 50 tickets at a time. (Go to www.regalcinemas.com and click on “Corporate Movie Tickets.”)
* Be imaginative. Everybody’s got some money-saving gift idea, whether it’s providing the recipient with a service -- such as baby-sitting -- instead of stuff, or ways to find things on sale.
Hunt’s favorite way to cut Christmas costs is to make gift baskets for her friends. They usually appear more costly than they are, she said.
One example: The “pizza basket” Hunt throws together includes an unglazed terra cotta tile from Home Depot -- about $2 -- instead of a $25 or $30 pizza stone from a gourmet kitchen store. Add a jar of sauce, a box of pasta, a checkered napkin and maybe a tin of olive oil, and you’ve got an attractive gift for less than $20.
“I saw Julia Child do this and I figured, if it’s good enough for Julia, it’s good enough for me,” Hunt said.
* Beware discounts that come with credit offers. Merchants often offer 10% to 15% discounts for those who take out instant credit at this time of year, but Hunt urges consumers to resist the temptation. Interest rates on retailer’s cards are often among the highest in the industry. Leaving a balance on a card for even a month or two is likely to wipe out the benefit of the discount.
Those who are exceptionally disciplined and have the wherewithal to pay off any balance within the grace period might be OK taking advantage of such offers, she acknowledged. But “it makes me nervous,” she said.
“The retailer knows that if you get the card, you are going to continue using it,” she said. “And the moment you leave a balance on the card, they’ve got you. It’s not a good trade-off for what it will do for you.”
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Kathy M. Kristof welcomes your comments but regrets that she cannot respond to every question. Write to Personal Finance, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012, or e-mail kathy.kristof@latimes.com. For previous columns, visit latimes .com/kristof.
