Valley Finance Pros: Budget Vacation To Avoid Breaking Credit Cards | Business


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Winter vacation is here. Need a reminder? Check your bank statements.

The National Retail Federation calculates that the average American will spend around $ 998 on Christmas gifts, decorations, meals, and a few items for themselves. The total is about $ 50 below the pre-pandemic high set in 2019.

Cardify, a market research platform that tracks consumer transaction data from its parent mobile rewards company, Drop, surveyed 2,000 users of the Buy Now, Pay Later (BNPL) platform. He found that 54% of them will charge a credit card for gifts this holiday season.

This sits between 65% debit cards and 45% BNPL plans popularized through platforms like PayPal and major retailers like Amazon and Home Depot. Cash? According to Cardify, 31% will use the old currency to make a purchase. Of course, there is a crossover in the data, as survey respondents chose more than one option.

Christmas is coming in less than two weeks. Despite this, Justin Buttrick, president and founder of Vision Wealth Advisors in Lewisburg, said it was not too late to set up a spending plan. It can be difficult, but it’s a great way to avoid stretching your personal finances too much and a great way to relieve anxiety, Buttrick said.

“They might not like to hear the word budget while on vacation. It might make them feel more like Ebenezer Scrooge than like Santa, but budgeting doesn’t mean you can’t be generous, ”Buttrick said.

BNPL can help you, but buyers must follow the conditions. Make the installment payments on time and enjoy an interest-free purchase. Failure to comply with the conditions may result in additional penalties and dollars.

“Assuming you’re responsible and not a debt burden, I don’t see a problem using it,” Buttrick said. “For those who don’t have a problem with accumulating debt, this can be a useful tool. “

So make a list. Seriously. Double check it, if you like. Decide who gets gifts, Buttrick said, set a limit, and stick to it. It doesn’t have to be down to the penny, he said, but at least create a range to stick to.

Ah, the debt. The average U.S. credit cardholder accumulates enough. Motley Fool analysis found that the average credit card debt is $ 5,525. Now, that’s down $ 968 from before the pandemic. Total credit card debt in the United States also fell to $ 787 billion, according to the analysis.

But that’s because a widely publicized Bankrate survey last year found that nearly 60% of American adults couldn’t make a $ 1,000 purchase with their savings in an emergency.

Stacy Mastrolia, associate professor of accounting at Bucknell University, teaches personal finance to senior university graduates.

Mastrolia has looked beyond Christmas 2021. She advises people to plan now for next year. Set aside $ 100 per month, or whatever is convenient for you. Do it by removing an unnecessary purchase every week. Pizza night here and there, she said. This will create $ 1,200 by the time the Christmas wishes are made in the coming year.

Right now, Mastrolia has agreed with Buttrick to make a list, set a limit and stick to it.

She suggests playing a game to find things.

Gift ideas? How about a framed personal photo, maybe, or newspapers and books?

Volunteering can cost nothing and mean a lot more to the person on the other end of the phone.

“I regularly offer people a free tax service. For me that’s okay, but for others it’s a few hundred dollars, ”said Mastrolia, emphasizing creative planning to deliver skills and time.

Families with grown children might consider switching to the Secret Santa Method: set a spending limit, give and receive a gift anonymously.

Another cost saving consideration: cut spending in other areas this month.

“Don’t make December the month to color your hair or go out to dinner with the family,” Mastrolia said.

And, she says, remember that gifts won’t mend broken relationships. Don’t spend to make amends.

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