It’s an unpalatable sensation that arrives by mail sometime in January by way of maxed-out credit card bills.
Suddenly, the season of giving has left you giving up hope of repaying debts before summer, at best.
Luckily, it’s avoidable for those who plan.
Learn to take charge of your holiday spending with these tips from Abby L. Myer, a CPA and senior manager with SF&Company CPAs and Business Advisors in York Township:
1. Paper or plastic?
As a general rule, cash is always king.
But for those who find it more convenient to use credit during the holidays, Myer recommends cards that offer cash back, frequent flyer miles or other rewards.
“I would strongly avoid credit at all costs, unless you are certain you can completely pay it off when the bill arrives,” she said.
If you can, many retailers offer their own credit cards and incentive programs.
Opening a card that will offer you 10 percent or more off — especially for those “big ticket” items — can be very worthwhile, Myer said.
But beware of the higher interest rates that often come with department store plastic.
“I would also caution people to pay attention to special zero percent financing offers,” Myer said. “Sometimes, minimum payments are due along the way. If missed, or late, interest rates can skyrocket.”
2. Big meals
You’re hosting a holiday meal.
About 20 of your cousins, aunts, uncles and stray friends are expected.
How do you prepare a feast without cooking your wallet?
Some turn to couponing — meticulously weeding through the ads in the Sunday newspaper and matching coupons with discounts.
“While I believe that this can provide much savings, the time to find and clip coupons can be very extensive,” Myer said. “As a full-time working woman and mother of three, I don’t have the time to spend sifting through a bunch of coupons.”
Myer suggests planning ahead, shopping at the same store chain to accumulate rewards points that can later be redeemed for savings.
Locally, discount retailers such as D&K Surplus Grocery in Red Lion and Amelia’s Grocery Outlet in Springettsbury Township offer alternatives to mainstream grocery stores.
“While you might not be able to get exactly what you’re looking for and will need to enter with an open mind, you may find additional savings there, which would be helpful only if it is a product you would consume anyway,” Myer said.
3. Extended warranties
Retailers offer extended warranties, which cover repairs and service beyond the time covered by the basic warranty.
It is often presented as an add-on at the register.
Before buying, Myer recommends questioning the quality of that big screen TV, digital camera — you name it.
“Is it a reputable manufacturer?” she asked. “If so, is the extended warranty really necessary?”
Another option is to use the money you would spend on the extended warranty to buy a better-quality item.
As a personal rule, Myer only purchases extended warranties for vehicles.
Before credit cards, consumers made agreements with retailers to reserve items, which were held until the consumer paid in full.
The practice had all but disappeared until the economy took a turn for the worse.
Retailers — including Walmart, Sears and Toys R Us — resurrected their layaway programs to accommodate shoppers who might not have access to credit like they once did.
Myer warns: Know your store’s policy.
“Often there is a fee for the convenience of the service,” she said.
“Also, if you do not pay timely, your items could be returned to the shelves for others to purchase.”
“Personally, I like the idea of personal budgeting/saving ahead to buy items so you can avoid hidden fees,” she added.
5. Tax deductions
Looking for a gift that gives back — and gives back to you?
What do you buy for the parent or best friend who has everything?
“Why not consider making a donation to a charitable organization in his or her name?” Myer asked. “Not only can this serve as a gift honoring your loved one, but you may also be entitled to a tax deduction.”
The IRS recommends saving a receipt for the purchase that includes the date, amount and type of donation.
To deduct the gift, you must file Form 1040 and itemize deductions on Schedule A of your personal income taxes.
Want more holiday ideas? Visit Smart’s Holiday Countdown page.