Mastering Money

Tips for Holiday Shopping

Now that Thanksgiving is over, it's time for the holiday rush.  As if office parties, family get-togethers and trips to the airport to pick up loved ones flying in from Norway weren't enough, there's also the prospect of shopping for the holidays.  Shopping means spending.  Spending means overspending.  Overspending means debt.  Or does it?

Here's some advice for holiday shopping, whether it's for Hanukkah, Christmas or Kwanzaa:

• Create a budget and stick to it!  I know you've heard this before, but it truly works; just make sure to track your spending so you're sure to stick to it.  Start with the total you wish to spend, then create a list of all those to whom you wish to give.  From the total, parse out the amount you wish to spend on each person on your list without going over your total.  Oops...I knew it...you went over.  Nope, you can't increase the total!  Keep the total the same, simply "fine-tune" each of the amounts you wish to spend.  If you're still struggling to economize, read further...
• Don't try to "one-up" your friends.  If they sent you movie passes last year, don't reciprocate by sending them tickets to the hockey game.  Then they send you on a trip to Tahiti, and, well, you get the picture.
• Join a wholesale club.  I think they are great!  Not only can you experience year-round savings on paper towels and cheese, you will find great novelty items at the holiday season that you don't find any other time of the year.  The problem for me is that I tend to treat myself to a bag of the chocolate covered almonds I buy for my friends.  This is a great place to pick up items for friends at the office, the person who delivers your paper, or the person who always waits on you at the cleaners.
• Buy for children only.  After all, the holiday season is for kids.  I know, some of us are still kids at the age of 50.
• If you have a huge family, draw names.  That way everyone won't have to buy for everyone.  Think about it...if there are 12 people in a family, and everyone is buying for everyone else, then there will be 132 gifts to buy (12 people will buy 11 gifts.)
• Shop early, especially if you're buying for out-of-town people and have to ship the gift to them.  If you wait too long, you may pay more for the shipping than the shopping.
• Cut down on the impulse spending.  I mention this no matter what time of the year it is.  Snakes are mere reptiles that have a simple nervous system:  stimulus and response.  Is that not what we're doing when we see something, don't think about it, and buy it?  We have brains that allow us to judge...use that brain!!!  If you think little Betsy will love that $2,000 doll, rest on the thought.  Think about it over night, or better yet, over a week.  Or perhaps, don't even think about it at all...simply walk away from it!
• The most overpriced items are the easiest to find.  This is true in the grocery store, and it is true elsewhere.  The items with the least markup are ones you have to bend over for, or reach for.  (I'm short, so I have to reach for everything.)  Chest-level items are usually the most expensive.
• Sometimes your employer may have discounts on movie passes.  These make excellent gifts and there is usually no policy that a company employee has to use the pass.
• Charitable contributions are another great idea, and you receive a tax deduction at the same time.  I remember when I graduated from high school, I received a donation from the lady who drove carpool on Tuesdays.  Yes, I even remembered what day she drove.  I didn't know her very well, other than "The Tuesday Lady," and she wanted to remember me at graduation.  It would have been awkward receiving a gift of material from her, so this was the PERFECT gift.  So great, I've remembered it over all these years...too many years to want to count them.
• Remember the rebound.  A gift you received in the past and never used because it was a lousy gift for you may make that perfect gift for someone else.  Just make sure you're not giving it back to the person who gave it to you.
• Cookies!!!!!  Yes, I said cookies.  You don't have to spend a lot on gifts.  It's not the law.  Sometimes homemade gifts are the best.  Personally, the only cookies I give would be Oreo's because I can't make anything better that that.  When you go to the trouble to prepare the gift, it truly comes from the heart, and that really means a lot to the recipient...or it should anyway.  Think about this idea the next time you go out and buy something expensive for someone; they may appreciate the homemade stuff more!

Here's to a wonderful holiday shopping season.  May the season and the New Year bring joy and happiness to all!!!

College and the Student Debt Trap

In October I had the distinct opportunity to speak to fourth year students at my alma mater, The University of Virginia.  The university was founded by Thomas Jefferson in 1819 and is steeped in tradition.  You just witnessed one of those traditions:  there are no freshmen, sophomores, juniors or seniors, they are first-year students, second-year students, well, you get the idea.

Speaking in the very room where I learned Business Law, I was amazed at the 100 or so eager faces at 8:00 a. m. (I know I wasn't that eager at that time of the day at that point in my life.)  I used to believe that college students would be fun to teach because they wanted to be there.  Today, that is truly an understatement.  Yes, teaching is fun, and more than ever, students are going into debt in order to receive a higher education, so they definitely want to be there!  They are concerned about the debt they are facing; they definitely wanted to hear what I had to say!

Suze Orman states that college debt is good debt.  I don't believe that any debt is good; my philosophy is to save for something before you make the purchase, including college.  However, here's something to consider:  students who graduate with a bachelor's degree, not even a masters or a doctorate, but simply an undergraduate degree, will earn 83% more than those with only a high school diploma. 

Not everyone can save before attending college and here are some statistics:

• Since 1989, tuition inflation has been running at 6%, twice the 3% rate of general inflation
• College students graduate with an average of $19,200 in tuition debt; graduate students can have upwards of $100,000 in tuition debt
• 25% of all students are putting their tuition on their credit cards
• 75% of all students have a credit card, and 40% of all students have more than four credit cards

For those who aren't fortunate enough to save for college first, or who don't receive a grant or scholarship (grants and scholarships are gifts, and thus don't have to be repaid), here are some tips to weather the student debt storm:

• Apply for financial aid at:  www.fafsa.ed.gov.
• Pay interest on your tuition debt while you are in school; this will help in a two-fold manner: 1) your debt will be lower when you graduate, as you'll only be paying the principal, and, 2) you'll get in the habit of making monthly payments.
• Only take out loans for tuition; don't be financing pizzas with debt.
• Once you graduate, always pay your loan on time, and consider having the payments debited automatically from your checking account.  In both instances your lender may give you a break on the interest rate, or perhaps even forgive some of the balance.
• Ask your lender if you can make smaller payments when you graduate and larger payments as you advance in your career and command more salary.  Lenders are usually willing to work out payment plans such as the accelerated plan mentioned above.
• Lenders may forgive your entire loan, based on your profession, such as teaching and emergency services.

Unfortunately, student debt is a fact of life today, with state tuitions averaging $16,000 per year and private universities averaging $32,000 per year.  An Ivy League education is approaching $50,000 per year.  Stay the course, and stay in school, as your earning power will be much greater.