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Mazzei Minute: 12/17/23

There are only a few days left for Christmas shopping. In the mad dash to get great gifts for family and friends, be sure to avoid those very costly Christmas mistakes that sometimes punish consumers later.

The biggest mistake is to buy presents with credit cards that you cannot immediately pay for. According to Dollarsprout, 35% of Americans took on debt for 2022 Christmas purchases. The typical credit card now charges around 22% for borrowed funds, which is a huge additional increase in cost in this era of high inflation.

Another mistake to avoid is not sticking to a per-gift budget for each item on your list. First, of course, you need to set an overall budget of total dollars for gifts, and then you need to determine the specific budget for each item. My wife and I have this discussion every year, and I’m lucky to have such a frugal spouse who always holds to our plan for our numerous kids, relatives and friends that we like to buy presents for. Five kids can get very expensive if we don’t stick to the plan!

And when you’re having fun searching for gifts and enjoying the festive season, do not splurge on yourself, despite the temptation. A 2020 Deloitte retail survey indicated that 51% of Americans end up buying themselves gifts over the holidays.  

As a financial planner, I see so much love and joy from clients every year when they use some savings to bless their kids and grandkids with gifts. Don’t let that special joy turn into a financial hangover next year because you have to dig out of a financial hole. Merry Christmas!


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