Apparently all the media is making a fuss over the high cost of vacation-related goods and services.
it should be so. After all, it’s very beneficial to let consumers know what their holiday season budgets will be like heading into December, especially as the cost of goods rises in a high-inflation economy.
Less noticeable in public squares is the painful impact of high holiday prices on individuals and entire households.
Airline prices set to rise 42.9% in the second half of 2022, as reported in a new report bank rate surveyor if gift shipping rose 13.9% or gas prices rose 15%, these aren’t just abstract numbers for economists to ponder.
They are the real numbers that mean the difference between paying your electricity bill and not getting your family decent medical care after an injury or illness, among other economic realities.
The Real World Impact of Holiday Overspending
Common sense says that adding extra costs to a household will ruin that budget. So what do exorbitant holiday expenses – especially high – do?inflation The price of his year mix – what to do with the family budget?
As many financial experts say, not in a good way.
“If you spend too much, you are more likely to end up in debt, especially credit card debt,” he said. achieve Vice President Tanya Peterson. “One consequence is that you end up paying far more than the purchase price for what you buy.”
Consider what happens if you have $3,000 in credit card debt at an interest rate of 18%.
“The standard 3% minimum payment is $90 a month,” says Peterson. “Paying only the minimum amount (which diminishes over time) would cost him $2,698.44 in interest, which would take him nearly 16 years to pay off, meaning he would be paying almost double what he originally paid for. increase.”
It’s for beginners. Peterson cites a further downside of holiday wastage.
• Lost the opportunity to do something good with the interest you’re paying your credit card issuer.
“Your credit card will be charged 18% interest, and if you pay off the balance, you are guaranteed 18% loss avoidance, so effectively you get an 18% return,” she said. .
• Interest will continue to accumulate if you fail to fully repay your credit card balance each payment period.
“If you’re still shopping with your credit card, you’re going to be further behind,” says Peterson.
• If you have credit card debt, your credit score may drop as your usage increases.
For example, if your total credit card limit is $10,000 and your total credit card balance is $3,500, that’s 35% utilization (that is, the percentage of available credit you’re using).
“Credit card usage can have a big impact on your credit score, so you need to keep your credit card balance and usage low,” Peterson added.
Tips to avoid trouble while on vacation
Good news? If you make an effort, you can reduce your holiday wastage. Start that process with these key budget strengthening action steps.
Take advantage of coupons and discountsWe all know that the key to buying holiday gifts is to make sure you get the lowest possible price. There are many efficient and smart ways to do it.
“It will take me a few more minutes to find the lowest price range,” he said. top cashback Consumer finance expert Rebecca Gramglia said: “From there, we stack the applicable coupons and promotions.”
To that end, holiday shoppers can take advantage of free cashback sites like TopCashback. The site guarantees the highest percentage money back on eligible purchases from over 7,000 retailers.
stick to the budgetSave money by having an open discussion with your family about your vacation spending budget.
“Be honest with your loved ones and don’t overspend for the holidays,” advised Gramlia. “It’s important to set a budget, especially when you’re shopping for friends, family, and loved ones, so everyone’s on the same page and you’re not forced to overspend.”
This is especially true for gifts for family members. “Try giving larger, more special gifts, like experiences,” added Gramlia. You can also combine these deals with credit card rewards and cash back offers.”
I have a payment account dedicated to personal purchases. Before you shop for gifts, open a checking or savings account dedicated to vacation expenses to more easily manage your personal shopping budget.
“This method is convenient because there is a clear cutoff for spending when the account is empty,” he said. Navy Federal Credit Union Finance manager Thomas Lakka. “Remember, New Year’s is just around the corner. Use your account to create a New Year’s shopping list and start saving in his January next year to minimize similar experiences on your next vacation.” Please be so.”
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