Don’t let Black Friday take you into the red and other savings ideas

In the US, the day after Thanksgiving is known as “Black Friday” which is the official launch of holiday shopping. Some even start on Thanksgiving, which is usurping the best family holiday in America, for people to spend money. If you are an American or know one, you know that Americans like to do two things more than anything else – be entertained and buy stuff.

I have written before about ways to save money, as we have too many folks who want yours. Let me use this Black Friday to rehash a few of them and speak to the holiday season where buying gifts is done in excess. If you follow a few of these, you will end up with more money to live better, have less stress, retire earlier, and be more in control of your life. In no particular order:

– you don’t need to participate in Black Friday. Trust me, the retailers will get desperate closer to Christmas and layer in discounts. You will also be less tempted to buy if you take your time.

– speak with your family and friends about gift giving. Maybe you could limit the giving to the kids or have a charity donation for adults donating a small sum to a favorite charity of the recipient.

– for year-round, do not play the lottery. I have written several posts on this, but my favorite line is from John Oliver who stated your chances of winning the lottery are the same as being struck by lightning while being bitten by a shark. Save the $10 a week and at year-end you will have $520 plus interest.

– for borrowing, tear up all credit cards but one or two. You do not need more than that. My wife and I get 3 to 5 offers a week for new cards. You get very popular when you manage your debt and save a lot of money.

– do not borrow from pay-day lenders. They are one step above leg-breakers and you will quickly spiral into a rabbit hole of debt with over a 1000% interest rate. I am not making this up. This is about the worst thing you could do if in trouble.

– be wary of credit consolidators. They are not all created equal, so do your homework. Also, there are a number of non-profit advisors who can help you consolidate or manage your debt.

– be wary of for-profit colleges which are 5 to 6 times the cost of community colleges. A rule of thumb, the bigger the celebrity advertising the college, the worse its record for graduating. These colleges prey on veterans, spend more on marketing than education and graduate less than 15% of their students.

– if you have no health coverage, sign up for the Affordable Care Act at http://www.healthcare.gov. Subsidies to pay for premiums are available up to $95,000 in income for a family of four, higher if a larger family and lower if smaller. Healthcare coverage will get you doing preventive medicine rather than reactive medicine and keep you from going bankrupt.

– if you work, save in your 401(k) plan or something similar. Using payroll deduction, it is like paying yourself first, especially when the employer will match your savings.

Finally, be wary of scammers. If it sounds too good to be true, it usually is. Many scammers prey on church and association leaders to get at others, prey on the elderly with confusion, and prey on everyone with fear (IRS scams, power shut off scams, computer repair scams, etc.). If someone offers you a potential high rate of return with no risk of loss, it is a scam.

If you do all of these things, great. If you know someone who would benefit from the advice of an old fart, please send them this link. Always remember, you do not have to buy anything except food, water, minimal clothing, transportation and shelter. The rest becomes wants and can be managed. Happy holidays.

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24 thoughts on “Don’t let Black Friday take you into the red and other savings ideas

  1. I would also suggest the following regarding credit cards. Put a low limit on the second card, and use it for places you don’t know, or new companies or suppliers. This will limit the exposure of credit card theft. Also, freeze your credit reports. All 3 of them. This will slow down and stop the number of credit solicitations you get, and will also prevent others from stealing credit applications and opening accounts in your name. Lastly, it will prevent last minute opening of new cards when solicited by stores or others.

    And lastly, stay away from Black Friday, as you suggest. Better deals await.

    Have a great holiday

    • According to the Bureau of Justice Statistics in 2012 85% of identity theft incidents involved already existing account information.

      Freezing a credit report can become expensive relatively quickly. In most states for a person who is not a victim of identity theft (with a police report) there are fees associated with freezing unfreezing etc.

      Placing a flag on a credit reporting agency account is free and it works.

      • Freezing our three credit reports was either free, or $5. There are no maintenance fees to keep them in place. Unfreezing is free.

        With a frozen account, no new accounts can be opened, in any manner. Much safer than a flag.

        The inconvenience, which is a good thing, is that one cannot just walk into a store and get a new credit account. Prevents impulse buying.

        Credit limits on cards, especially low limits on a 2nd card which might be used only for new stores or sites, helps control risks. Identiity theft, if they can’t open new accounts, is of little value to the crooks.

        At least all these steps have been successful for us for over 10 years.

        just our experiences

      • Thanks Barney. We have had similar experience. Plus, it does offer some piece of mind. Ironically, the first ID theft attempt came off someone getting a hold of my credit report. I don’t know if you remember this, about twelve years ago, Citibank got in trouble for tossing reports in the dumpster and not shredding them. That may have been the cause.

      • Barney: It’s great that freezing the accounts works for you. I’ve found that the flag on the accounts, with a notification to call for confirmation, works. I am not one for impulse buying or impulse signing up for credit. It is also cool that you live in one of the few states where it is free (or low cost) for freezing and unfreezing credit reporting agency accounts. Where I live it costs $10 to freeze, $10 to unfreeze, $10 to unfreeze for a period of time, and $10 for a new pin number.

        Here is a link to the list of fees for Equifax: https://help.equifax.com/app/answers/detail/a_id/75/search/1

  2. Wise advice. The only thing I would add is: talk to your kids about each of these things, especially teens. It’s great for them to see your example but also hear it explicitly. For example, if you don’t buy lottery tickets, they may not know you stand against them “on principal.”

    • Great advice. One of my favorite stories is when a mom was driving her daughter and she said stop at the convenience store so she could buy a $5 lottery ticket. The mom said here give me the $5 and threw it out the car window. “What did you do that for?” the daughter asked. Mom said, “The money was being thrown away anyway and now you have a better story.”

  3. Great suggestions! I realize my method for financial sanity is not in vogue, but it works for me. If I can’t pay cash for it, I can’t afford it. There were only two exceptions; a house or a car. It’s called living within your means. Crazy, huh?

  4. Note to Readers: A friend of my son’s came over and offered a “Happy Black Friday.” I said ” I don’t really participate, so it is just a good Friday to me. He shook my hand with pleasure at my response. Some times, small protests are meaningful. For those who did brave their fellow shoppers, I hope they found the value they sought.

    • I recently read that 76% of the purchases on Black Friday are made by the person for himself or herself — not for others at Christmas. I’m with you and your son’s friend. Well done. We don’t go near a tore on Black Friday, either.

      • Hugh, if I counted all of my typos, they would number too many. I have this habit of re-reading and an old post that shows up on my daily posts read list. More often than not, I will find a typo that slips through. Yesterday, I found a duplicative word in my title, of all places, in a post I wrote a few months back. I read and re-read, spell-check, etc. and then whoops. BTG

      • Interesting. That statistic goes along with our narcissistic world. People are giving gifts to the most important person in their lives – themselves. I am glad you abstain as well.

    • I don’t participate in Black Friday either. Only reason I would be in a store on that day is if I ran out of a necessary item like apple pie and needed another that day. 🙂

  5. Some good points. To slow down and/or stop the number of credit solicitations opt-out of pre-screening: http://www.optoutprescreen.com.

    Before closing accounts, cutting up cards, and/or lowering a credit limit keep in mind the elements that go into calculating a FICO score:

    Percentage of on-time payments (35%)

    Total debt to credit available ratio (30%); it is also calculated per card and as an overall percentage of open credit to debt. The total debt amount is the balance at the time the bank reports to the credit bureau.

    Age of credit lines open (15%),

    Hard credit inquiries (10%),

    Derogatory marks (10%),

    Another option to just closing accounts is to pay them off and then use them rarely. When you do use the card pay off the balance during the grace period to avoid paying interest.

    • Roseylinn, great points. I am at a different place in purchasing and worry less about a FICO score, but others who are establishing credit need a good score. Not stated, though, is ID theft risk increases with the number of cards as I found out the hard way, when someone got a copy of my credit report and tried to change addresses. So, people may have old store accounts that are open that they forgot they had. The next big credit crisis will be on auto loans, since they were purposefully omitted (to get the CFPB law passed) from the Consumer Financial Protection Bureau. Thanks for your well thought out remarks. BTG

      • Good points. Sorry to hear about them trying to change the address.

        I one time called and closed a store credit account. A while later when I got a copy of my credit report noticed that it was still listed as open. So, I called to find out why. Turned out that when I closed the account they merely marked the card as “lost/inactive”. I then got it actually cancelled.

        I read something about the auto crisis, cause of the sub par high interest loans or something? I also read that day about how credit card companies were selectively ignoring bankruptcy law and forcing people to pay on debt discharged. That was a bit more annoying to me than the auto issue.

      • Roseylinn, thanks. Having been through the issue with retailers and reporting agencies, you have to be relentless in getting stuff fixed. One of the reports had the fraudulent address left on my credit report – I said this is what started all of this, so please take that off my report as I have never lived there.

        The auto crisis is due to the sub par interest rates in excess of 22%. When we help our homeless families, we suggest they turn the car in rather than pay $500 a month. Then we help them save to buy a car with a 0% loan or low interest loan. $100 versus $500/ month is a huge deal.

        You may want to read Elizabeth Warren’s book “A Fighting Chance.” She is probably one of the best practical experts on bankruptcy in the country, which is why she was tasked to lead the CFPB and why the GOP did not want her to be the permanent director. In the book, she tells the story of how she was invited to a meeting with a big bank on helping people with their payment problems. When the CEO found out that ran counter to their profit engine, she was dismissed from the meeting. In other words, they made money off perpetuating payment problems rather than solving them.

        Great series of comments. Thanks, BTG

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