Smarter Holiday Spending?

The average American will have spent nearly $900 on holiday presents this year. If you have two adults in your household, that’s almost $1,800. In looking at the sales numbers from the Black Friday-Cyber Monday weekend, Americans are getting smarter about how they spend that money. Brick and mortar stores suffered about a billion-dollar decrease in sales from 2014. Instead, consumers pushed online purchases to a record high.

In addition to this, sales numbers indicate earlier spending, more diversified spending and shopping carts that were more full at fewer locations. All of this points to people purchasing items they had selected before the big sales, then spending less time browsing and far less time in the harsh winter conditions.

Yes, we’re getting smarter about how we spend on the holidays. But let’s set up a plan today to be in an even better position at the beginning of the next holiday shopping season.

Step One: How much did you spend this year?

Consider how much you’ve spent this year. You can use your receipts, or you can estimate what you bought or just use the $900 per person national average.

Next, add to that how much you’ll spend in interest on credit cards while you pay off the balances. If you’d like to avoid the math, you can estimate that the total cost is $1,000, because that’s a nice round number for this exercise. (If you’d like to be more exact, use our loan calculatorr)

Step Two: Putting away that money for next year.

To use this money as intelligently as possible, it’s a good idea to save as much as possible ahead of time. That way, compound interest is in your favor instead of working against you. Start with one of our savings plans. A great option is our Savers’ Club, which you can find here, which offers good interest along with easy automatic deposits.

Step Three: Paying off this Christmas.

It’s time to get those credit card payments down so we can move into the new year with a clean ledger. If you’ve got the extra income, pay them down with that, but we also know times are a little tighter for many of us. Luckily, we have a variety of solutions for paying down credit card debt:

  • Home equity loans are great for high balances, because they turn high interest credit card debt into low interest home equity debt. A home equity loan reduces the interest you pay, so you can pay off your loan more quickly. Details can be found here.
  • If you don’t want a home equity loan, your credit card debt isn’t that high, or you don’t own a home, you could also consider one of our fantastic VISA credit card offerings. We offer great rates, so you can transfer your higher interest balances onto a lower interest card, which will let you pay off the debt more quickly.

Step Four: What will you do with your money?

After you’ve paid off holiday 2015, and by the time holiday 2016 rolls around, you’ll have saved more money than you need since you saved enough for this year. Interest has worked in your favor, and suddenly your next December is one in which your pockets will be full. That gives you 11 months to decide what to do with your money. Build up an emergency fund. Save for your next vacation. Get your car maintenance done on time. You have choices!