By Bill Quain
Most people make a big mistake approaching the holiday season. They go into it thinking they are prepared: big mistake! Here’s what happens. Many companies make a large percentage of their sales, and subsequently their profits, in the few short weeks between Thanksgiving and New Year’s Eve. However, unlike you, those companies have been preparing all year long. They’ve studied you, followed you on social media, and tracked your buying habits, just to figure out what it will take to sell you something.
And what have you been doing?
In last week’s column, I warned you that you were not trained for the Turkey Thursday to Black Friday marathon event. Now, if you weren’t in shape for those 48 hours, what do you think your chances are for a six-week super marathon? Are you beginning to understand just how woefully unprepared you are?
Why is it called “Black Friday”?
According to Alexa, the term Black Friday originated in 1929 to describe the terrible Stock Market crash. However, in 1961, Philadelphia police began to use it to describe the crowded stores, and even more crowded highways, as people took advantage of the day off to begin their holiday shopping.
By the way, I’ve heard it used to describe the day when many retailers “got in the black,” meaning that most of their profits came between Black Friday and New Year’s Eve.
For most Americans, it’s “Red” Friday!
If this shopping stretch is good news for retailers, it’s terrible news for holiday shoppers. Even if you are cautious all year long and carefully watch your budget, it’s difficult to keep your money in your pockets. While you might think it’s because you really wanted to buy all those gifts, you have to understand that every retailer has been targeting you. They are all planning to be at the top of your list to compete for the budget that you may have set for yourself.
“Apply for our card and save.”
A week or so ago, NBC News ran a segment called “New Warning Issued for In-Store Credit Cards.” We all know what happens. You go to the check-out counter and the clerk says, “You can save 20%, if you get one of our credit cards.” Well… you’re no dummy! 20% is 20% right? In fact, you may say to the clerk, “Okay, keep this stuff here, I’m going to get some more items!”
Don’t do it! The NBC report stated that some in-store cards have interest rates as high as 36%. That’s insane! But here is the worst news: Those in-store cards aren’t targeted at high-end buyers. For example, the three stores that NBC specifically named are Big Lots, Old Navy and Petco. Not exactly Bloomingdales! Imagine running up a $1,000 credit card bill and paying $360 in interest if you had kept that balance for a year! If you got a 20% discount when you opened the card, that was only $200. The math adds up in the store’s favor!
Make a list. Check it once!
Look, Santa may be checking his list twice, but you should make your list once and then stick to it! Don’t start adding on purchases whenever you see an advertisement that was created just to get you to make an impulse purchase. Impulse purchases can often come in the form of upgrades, and those are everywhere! You can’t even get away from them when you buy online. Think about: “People who bought this, also bought…” and other impulse gimmicks.
You can’t beat credit card companies.
Do you think you are smarter and more experienced than a credit card company? As Dave Ramsey points out, if you are so smart, why do credit card banks own all those big stadiums? They are buying those sponsored “naming rights” because they are making bundles of cash from shoppers. And when do we shop the most? You guessed it – from Black Friday through Dec. 31.
This year, enjoy many happy returns.
“But Bill, I take a lot of things back.” OK, now you’ve just extended the season! The stores know you are going to return purchases and gifts. They love it when you do that!
Let’s say you bring back a $100 item. Do they have the customer service area for returns at the front of the store? No, it’s way in the back, almost hidden. Meanwhile, you have to walk past all those other things in the store. And guess what? It turns out they are on sale! And, when you walk up to customer service to do the exchange, and you have another $100 worth of stuff, what does the clerk say? “If you open a store credit card, we’ll give you 20% off.” Hey, at least you can visit your money the next time you go to a stadium.
I’ll pay my credit card off.
OK, so you pay your credit cards off every month, no matter what. Congratulations! But what if the unexpected happens – like Christmas comes on Dec. 25 this year? (Another Dave Ramsey favorite saying.) Studies show that the average person spends 17% more when they use a credit card.
Here’s the thing. You can say you are going to pay those credit cards off each month, but something is bound to happen. Then wham! You miss a month.
Why tempt fate? Instead of buying more stuff than you intended, and paying it off almost every month, why not try a new plan? Create a list and stick to it! If you do that, you never have to worry about surprises. It’s the “surprises” that get you, and “Oh no, I overspent again this year” is no surprise!
Stop getting trained. Start training yourself!
All the training you ever need is on YouTube. I recommend starting with Dave Ramsey’s video: “Why Can’t I Use Credit Cards If I Pay Them Off Every Month?”
In the episode, Dave isn’t even talking about store cards! You’ll either love this episode or hate this episode, and it will all depend on whether you are serious about sticking to that shopping list this holiday season.
Let me know your thoughts! As always, you can reach me at bill@quain.com. And as I say each week, I’ll see ya in the papers!
Bill is a Professor in Stockton University’s Hospitality Management Program. He is the author of 27 books, and a highly-respected speaker. Even though he is almost totally blind, Bill is a long-distance runner and runs the Ocean City Half Marathon each year. He lives in Ocean City with his wife Jeanne, and his Guide Dog Trudy. Visit www.billquain.com or email him at bill@quain.com.
