Now that the holidays have decided to move into the express lane of time and travel towards us at the speed of light, we had better ready ourselves for the 5 S’s of Christmas: 1) selecting; 2) shopping; 3) savings; 4) spending; and 5) Santa. For the next 5 weeks we will be looking at one of these S’s. This week we will begin with Spending.
There are many different methods of spending for those “must have” gifts that your loved ones have been drooling over for so long. Many years ago there were only two methods of having the money to buy the desired present. First, the method of choice for most “over 70” crowd, is called “savings”. Second, a method that is used many times with “savings” is the “buying only what you can afford”. These two methods are somewhat of a lost art and I personally have only heard about them in books and the reading of ancient artifacts.
One of these historical writings mentions a ritual known as Christmas Club. This amazing tool was used by banks to aid members to set aside a certain amount, on a weekly or bi-monthly basis, to help them have money for Christmas. It was like a reversed credit card, with the payments being made before the purchases and instead of the patron spending 29% interest each month to make up for the credit card monthly fees, they would receive the interest (yes, the interest would come to them). This in turn would give them more money than they put into their account. As late as 1966, this was determined to be the American way of Christmas spending. That was before credit cards spending for Christmas became as customary as the artificial Christmas trees.
Today, the method of choice by most Americans is just the complete opposite as the first two methods mentioned: put every Christmas item on credit card and “never refuse a child of whatever they want”. (“New $500 game machine? – sure, let me apply for this new credit card!”) If I sound slight fuchsias, it’s because I am still paying off my Christmas shopping debt from 1972.
To get the most out of using this plastic god for holiday cheer there are certain rules and secrets that you need to learn to have a safer, cheaper, happy holiday.
Rule #1- Make sure that you shop only on secure, trusted Internet sites. Ask yourself these questions:
1) Are they a known reliable online company? Are you shopping at Amazon.com or Grannysdiscountbooksandadultsite.com?
2) Do they have a physical address?
3) Is there a method of contacting the business?
4) Is their shopping cart secure? Do not enter your credit card on a site that is not secure. A secure site online is just as secure as using your card at your local Wal-Mart or grocery store.
Secret #1- When Shopping online use your credit card and not your debit card. According to the Federal Trade Commission, Federal law says that you are only liable for $50 if your card is misused.
Rule #2- Pay you bill off each month. Any credit counselor will tell you that this is the best way to manage your money and keep yourself out of financial ruin. If you can’t afford it, don’t buy it.
Secret #2- When using a credit card make your purchases the same day you receive your credit card statement in the mail. This will give you a few extra weeks of non-interest time to save up to pay off your debt.
Rule #3- Don’t save your credit card information on the web site or for that matter on your computer. Even though the web site may be secure there were a few reports last year of hackers getting into different system of online stores. It really doesn’t take that long to re-enter the information.
Secret #3- Pay your credit card online and make your payment at least 2 business days before it is due. This may seem like a contradiction to not saving the credit card information on line but it is not. The credit card information for the lender maintains your credit card information in their secure data base. Once again, it is a similar retrieving system as if you made a purchase at a department store.
Rule #4- Protect your password. Don’t save your password on your computer and don’t use the same password over and over. Keep a written log in a safe convenient place. There have been hackers who have been able to access information from personal computers. Protect yourself.
Secret#4- Use a formula for your password: have a prescribed combination of letters and numbers you use for a common word that you are sure to remember, then a number you use for the site you are at. For example ReginAmaz might be a formula for a password password at Amazon if I used the first 5 letters of my name along with the first 4 letters of the sites name. ReginBarn might be a password for Barnes and Noble.
Secret#5- More secrets on passwords: use numbers in place of letters at times. Use 1 for an i or l, 0 for o and maybe even 9 for g. For example, with the above password for Amazon might be Re91nAmaz.
Secret#6- If the systems are down, don’t ever call your order in. Wait until the systems come back up. If the Internet site is down, it is possible that their computers are down as well. Therefore when calling an order in, depending on the call center, your credit card information may be written down on paper instead of being entered into a secure location.
Secret#7- If you’re in need of extra money and decide to sign up for a new credit card, read the fine print. One of my credit cards recently sent me a letter saying that I qualify for their platinum card. The fine print says that there is a $72 annual fee! Watch out for low interest rates, the companies have to make their money somewhere. These introductory rates may lead to an astronomical rate or exorbitant annual fees.
With these rules and secrets now firmly placed before you, your holiday spending should be safer and wiser. Next week we will look at “Saving”.