Why Not Shop?
Black Friday deals have come early this year, but even though you can score outrageous savings, you may want to rein in your shopping — especially if your credit is at stake.
“With the ghosts of Christmas past still lingering on many credit cards, piling new debt on top of old cannot be considered responsible by any measure,” said National Foundation for Credit Counseling spokeswoman Gail Cunningham. Here are 10 tell-tale signs, according to the group, that you shouldn’t go on a holiday shopping spree this year.
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You argue at home about money.
Fights among family about spending habits could be a clear sign that you shouldn’t be shopping, and cutting down on holiday expenditures — or cutting them out entirely — doesn’t have to make for awkward exchanges.
If you’re in no financial shape for holiday shopping sprees, discuss spending limits on individual gifts with your family, or even skip gift-giving this year, suggests the University of Illinois Department of Agriculture and Consumer Economics.
Most adults spend $100 to $500 more than they expected on the holidays, and families are having a hard time paying that much off in credit card debt, the University notes, suggesting that shoppers make a written shopping plan and stick to it.
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I sometimes hide my purchases.
If you’ve gotten comfortable with a certain standard of living, it can be difficult to cut your spending at all, let alone during the holidays.
But if you hide purchases from family and friends, chances are that someone wouldn’t approve. If that’s the case, they might be more understanding if you decide not to buy gifts at all this year.
In lieu of store-bought gifts, you can also opt to make gifts by hand, or give the gift of your time or talents, whatever they may be, to a friend or family member, consumer economists suggest.
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I have thought about filing for bankruptcy.
Even if you’re not actually on the brink of bankruptcy, the thought alone may mean you’re already in a dire situation and shouldn’t be shopping. Plus, your situation could be made worse as credit card interest rates rise before, during and after the holidays. As these terms change, you could find yourself in a really tough spot.
If these are some of the thoughts going through your head as you prepare to plunk your card down on a lavish holiday gift for a friend or loved one, you should definitely think twice.
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I struggle to make my mortgage payments.
The unemployment rate is past 10% in the United States, and could stay there for years to come, according to a Federal Reserve Bank official.
It may seem obvious, but if you’re unemployed, you should absolutely have a list of your financial priorities and if you’re having trouble making mortgage payments or paying rent on time, you should definitely reassess your shopping habits this winter. This is especially true if you’re among the one in six Americans who are having trouble getting enough food, according to CNNMoney.com.
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I sometimes pay my bills late.
About six in 10 workers live paycheck to paycheck, according to a recent survey by CareerBuilder. If your pay is spent before you even receive it, you may be racking up debt that you may still be paying off a year from now. Thus, it’s important to wean yourself off excessive holiday spending.
“Ignoring the reality of your financial situation will almost certainly lead to further financial distress down the road. It will come in the form of an unmanageable debt load, resulting in a damaged credit report and lower credit score, likely limiting your access to future credit,” says the National Foundation for Credit Counseling. “If there were ever a year to approach holiday spending with your head instead of your heart, this is it.”
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I have used more than 30% of my available credit lines.
Using more than 30% of your available credit across all of your cards could reduce your credit score by as much as 100 points, according to BankingMyWay.com. So if you’re already past that point and you don’t have the cash to cover your holiday shopping, you may want to reconsider your gift-giving plans.
About 14% of Americans use 50% or more of their available credit, according to a study from Experian, one of the three major credit scoring agencies.
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My debt interferes with my sleep, job or home life.
If your credit card or other debts take a toll on you even in your sleep, cause strife at home or prevent you from attending work-related social functions, you may want to think twice about how you spend this holiday season.
At home, parent-child discussions about credit card use could prevent some stupid credit card mistakes, notes CreditCards.com. And if you are concerned that your kids might make the same mistakes as you, consider this: One third of respondents of a Sallie Mae survey on credit card use rarely or never discussed credit card use with their parents and were more likely to be surprised at their credit card balance when they receive their statements.
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I have little or no savings.
Because of the recession, personal finance experts have been recommending that Americans save six months to a year’s worth of expenses in case of an emergency or unexpected job loss, up from a suggested three to six months previously. So you may want to pad your emergency savings instead of shopping for the holidays.
That way, if sudden expenses do come up or you end up unemployed for several months, you won’t regret buying expensive toys and gadgets for your friends and family.
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I am receiving collection calls or notices.
Collection calls and notices from creditors usually mean you’re having trouble paying your bills, your payments have been late and you may be considering bankruptcy. Some may be tempted to throw caution to the wind and go on spending sprees, since they’re so underwater already and they figure they’re never going to be able to pay it all off anyway. This would be a fun way to stick it to the credit card companies, right? Actually, no. This would be an unwise decision. When you go through a bankruptcy, a judge and an attorney for your creditors can see those spending sprees and potentially delay or impede the discharge of your debt.
This is especially important for consumers aged 35 to 44 to consider. They have the highest bankruptcy rates of any age group, according to CreditCards.com, though younger consumers between 25 and 34 are increasingly filing for bankruptcy as well.
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If I lost my job, it would mean an immediate financial crisis in my life.
Six in 10 Americans live paycheck to paycheck, and believe it or not, three in 10 making $100,000 a year or more are too, according to CareerBuilder. The job search site also says that some workers have been dipping into their long-term savings and reducing their retirement savings contributions. But about a third of workers don’t participate in retirement plans or other savings accounts at all.
"Whether it’s by keeping a tighter budget, finding ways to bring in additional income or adjusting their savings strategies, workers are doing their best to weather the current storm,” CareerBuilder says. Let’s make sure none of us make the storm worse by shopping irresponsibly this holiday season.
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