The Magi greeted the Christ child with gifts of gold, frankincense and myrrh. But a modern worshiper might have shown up with an item purchased online, using a credit card, while exceeding the family budget.
With Christmas retail sales in the United States projected top $1 trillion this year, according to research firm eMarketer, the temptation to spend freely can wreak havoc with family finances, said Guy Ciarrocchi, president and CEO of the Chester County Chamber of Business and Industry.
“You need to be a smart consumer all the time, not just in December,” said Ciarrocchi, a member of St. Norbert Parish in Paoli.
Ciarrocchi’s first bit of advice for Christmas shoppers: set a budget and stick with it.
“It may sound obvious, but in my personal and professional experience, I get the sense that most people don’t do it,” he said.
Another way to avoid overspending is to have honest conversations with family members about gift expectations.
“Discuss wants versus needs,” said Ciarrocchi. “If your kids are older, ask if you can defer more expensive gift purchases until the post-Christmas sales begin. The world won’t end if you celebrate the birth of Christ on December 25, and exchange presents on December 28.”
Consumers should also be mindful of how easy it is to rack up a bill when shopping online.
“It becomes painless,” Ciarrocchi said, noting how the convenience of click-and-submit credit card transactions can fool shoppers into thinking they’re not spending real money.
Since online purchases will account for slightly more than $123 billion of this holiday season’s sales, Ciarrocchi advises using some digital discernment.
When making an online purchase, be wary of the site’s recommended products, which usually appear under the heading “you may also like” on the product detail or shopping cart pages. Such a technique, known as “cross-selling,” entices customers to spend more by buying related items.
Online shoppers should also compare prices rather than relying on a single vendor, said Ciarrocchi.
“Monster companies like Amazon and Walmart don’t always have the best deal,” he said. “Use your search engine.”
Some vendors will even drop their prices if you select an item but don’t complete the transaction — an activity that retailers call “shopping cart abandonment.”
“You’ll sometimes get an email a bit later, notifying you of a price drop on that item,” said Ciarrocchi.
Being flexible in your consumer choices and in your delivery dates can lead to savings as well, he added.
If you’ve already given in to temptation and put Christmas on credit, there’s still hope for restoring balance to your balance sheet.
Ciarrocchi said consumers should confront debt by contacting their credit card companies and discussing payment arrangements, rather than waiting until the last minute — or worse, ignoring the obligation altogether.
Leveraging out of credit card debt by refinancing your house or taking out a home equity loan should be a last resort, he said.
While every family’s financial situation is unique, “you always want to protect your home,” said Ciarrocchi. “It’s one thing to owe $5,000 to Visa. It’s another to owe that same amount to Wells Fargo on a loan that could endanger your house.”
Above all, Ciarrocchi said, keep the focus on the real reason for the season, and exercise prudence when preparing for it.
“There are ways to have fun and enjoy within any budget,” he said. “If you turn Christmas into a spending extravaganza, you’ll miss out on what we’re really celebrating.”
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