How to Keep Black Friday from Sending You Into the Red

Black Friday How to Keep Black Friday from Sending You Into the Red

This post is probably too late for anyone who’s already headed out the door into the crazy world of Black Friday shopping. If so, perhaps you can consider how to better prepare for next year’s Christmas shopping now.

I was somewhat shocked when I opened up the Wall Street Journal last Wednesday and read about how American debt was on the rise again. Much of this is due to the feeling among most Americans that the recession is over. Job prospects seem better and the housing market is in full recovery, so consumer spending and borrowing has been on the rise since the last quarter of 2007.

There was a bit of good news in the article because credit card debt has fallen $159.08 billion since 2007, but it’s on the rise again. If credit card debt follows the trend that mortgages, auto loans, and students loans have over the last 1 to 2 years, then you can expect Americans to to add several trillions in debt in the years to come. As a culture, we’re well on our way to surpassing the 2008 peak of $12.36 billion in total household debt.

Black Friday is a Two-Way Street

It’s no secret that many retailers depend on the Christmas shopping season for a large portion of their yearly profits. If you think about it, this obviously means that the vast majority of America’s household consumer debt is accumulated during this same season. Even though Black Friday spending was down last year, the average Black Friday shopper still spent $407.

How much of that spending do you think was planned? I don’t mean planned as in, “Hey, this look like a great gift as a great price. We should buy it!” By planned I mean the money for Black Friday purchases was in the budget and set aside in cash.

The truth is, most American’s can’t afford Black Friday.

Redefining Affordable

The word affordable in today’s culture is usually measured by whether we can make the monthly payments. We walk into a store, find a product we want to buy, try to get the best financing possible, and then see if we have enough wiggle room in the “budget” to cover the added drag on our income. Then, the next time we find a product we want, we simply repeat the process all over again.

Now consider that on Black Friday, not even this much forethought takes place. Such frenzied shopping only allows for a mad dash to the back of the store while delivering a well-placed elbow or two to grab the day’s prize. Then it’s an upstream swim to get to the cash registers and swipe whichever credit card hopefully has enough to cover the purchase. There’s no thought about the cost until the credit card bill comes in just after Christmas, completely ruining our festive mood.

I’ll admit that I once lived this way. Though I’ve never been out shopping on Black Friday, I can’t recall how many times I purchased something without any real thought. The only question that ever entered my head was the one I asked my wife: “Do we have enough money left at the end of the month to cover paying for this thing I want?”

There’s a better way to spend money.

Let’s redefine affordable to mean what it meant to our grandparents and great-grandparents. Do you realize that the contemporary concept of consumer credit wasn’t introduced to the world until 1950 when Diner’s Club came on the scene? How did people possibly get by?

Cash.

If you want to keep yourself out of the red on Black Friday, and any other day for that matter, you need to redefine the answer to “Can I afford this?” for yourself. Here are a few questions you should ask yourself:

Determining if You Can Afford to Make a Purchase

  1. Do you have the cash for the purchase? The first step of redefining affordability is pretty simple. If you don’t have cash on hand to cover the purchase, you can’t afford it. If you have to borrow a single dime or put a single penny on a credit card, you can’t afford to make the purchase. You’re choosing to not live within your means. You’re choosing instant gratification over wisdom.
  2. Have you planned ahead for the purchase? Is it part of your budget? Let’s say you want to buy a new TV. This isn’t to say you need to have a specific line item in your budget labeled “TV,” but at the very least you should have a line item labeled “Christmas purchases” or “gifts” AND it should have enough cash available to fully fund your TV purchase. If you haven’t budgeted for your purchase, you can’t afford it.
  3. Have you searched for the best deal? This time of year, there are dozens of deals available, but before handing over your hard-earned cash, make sure you’ve diligently searched for the best deal. Nowadays, you can often find deals as good or better online compared to the stores. In fact, if you search deep enough, you’ll probably find a better deal. This is true especially when you consider that many of the “doorbuster” deals on Black Friday are for relatively low-quality products, or for a very limited supply. It may be worth spending a bit more to get a better quality product. And if you find a better quality product that you don’t have enough cash for, just be patient and save up a little while longer.
  4. Will you have to “steal” money from somewhere else in your budget to make this purchase? Part of making sure that you really have the cash to afford your purchase is that you’ve specifically set the money aside. Don’t even consider using money that you’ve put aside for another purpose.
  5. Are you planning to take money from your emergency fund or long-term savings? Buying Christmas presents is NOT an emergency. Christmas comes around in twelve month intervals, so it’s not a surprise. You’ve had an entire year to plan and set money aside for your purchases. Please don’t be foolish and steal from your future either. Leave your hard-earned savings alone.

In the end, make sure that you don’t come to regret your purchases by sinking yourself further into debt, making an impulse purchase, or not searching for the best deal possible.

When you come to the realization that debt is like a great weight dragging you down and keeping you from reaching your financial goals, you’ll do all that you can to keep from adding to that debt. You’ll learn that delaying gratification and keeping yourself from making foolish purchases is far more satisfying in the end that the temporary pleasure your purchase might bring.

Here’s a handy flowchart to help you make a better decision.

Can I Afford this Purchase Flowchart How to Keep Black Friday from Sending You Into the Red

Adapted image by Christian Ferrari

Happy Thanksgiving from The Incremental Life

1 Chronicles 16 34 Happy Thanksgiving from The Incremental Life

Sometimes You Just Need to Ask for Help!

Ask for Help Sometimes You Just Need to Ask for Help!

The Struggle is Real

As I get older, I’m developing what I joking refer to as adult onset Attention Deficit Disorder. This is not to make light of those who have attention deficit problems because I’m growing understanding more and more each day just how big a struggle having something akin to ADD can be.

In recent years, it’s gotten much harder for me to concentrate. The smallest sounds break my concentration. So do repetitive sounds. When I’m having a conversation with someone in public, I often have a hard time focusing on the other person when there are people walking around. My eyes are constantly drawn away from the moment toward the motion.

(Even as I write this, I’m sitting in another room of the house with some white noise going so I can concentrate.)

I’m also learning that I get frustrated much more easily nowadays. Some of it is due to the fact that focus has become harder to attain and retain, but also because I can remember the days when it wasn’t like this. There was a time when I could work or read with tons of noise and distractions going on around me and still be highly productive.

Back when we lived in Alaska, one of my responsibilities was directing the Pep Band. Not being a sports fan, I would sit in front of the band with a book and read several chapters during basketball games. I was able to concentrate on the book AND pay enough attention to the game that I never missed a cue when it came time for the band to play.

I once could work listening to music or talk radio, or read a book while the TV was going and people were in the room talking or making noise.

Not so much anymore…

Forgetting I’m Not Alone

What’s all this have to do with asking for help? Well I’d recently been having some extremely frustrating software problems that were impeding my work. A great deal of my frustration was due to the additional distractions going on around me. Over the course of more than a week my frustration grew and I was very nearly at a boiling point.

Then, my wife calmly suggested something I should try doing instead of my usual procedure. Guess what? Her work-around worked great, and in fact is more efficient than my old method anyway.

So why didn’t I just ask for help? I know some of it was due to frustration and my inability to focus, but some of it was due to pride. You see, I’ve always been the computer guru, not only at home, but in most places where I’ve worked or volunteered. I’ve grown accustomed to people coming to me for help with their computer problems, not the other way around.

Sometimes, especially when we’ve been a leader in a certain area or achieved success, we lie and tell ourselves that we don’t need help. We fool ourselves into thinking we know more than enough to get things done, and surely we know better than everyone else. But that’s just not true.

When you find yourself frustrated or stuck, don’t forget that one of the best tools available to you is to ask for help. You might just need to swallow your pride, but isn’t that better than not making any progress at all?

If you’re a leader who’s done a proper job of finding the right people for your team, that means you’ve gathered people who know more about some things that you do. Hopefully you’ve hired people that not only complement your knowledge and skills, but also fill in the gaps where you’re lacking. It should never be an embarrassment to ask a fellow team member for help.

Remember, you’re not alone. Sometimes you just need to ask for help.

The 6 Types of Insurance You MUST Have

6 Types of Insurance The 6 Types of Insurance You MUST Have

Like most new employees, I remember when I got my first job and just how little take home pay that job afforded me. Even if you knew the facts in your head, I’m sure you were probably shocked at how much of your paycheck was taken out for taxes and social security. I’ll bet you sometimes wondered if the job was worth what little you were able to deposit in the bank.

As I grew and learned more about how the world worked and how to be a responsible adult I realized the need for the many different types of insurance available to me and my family. Unlike taxes, I had a choice whether to purchase insurance or not, and how much coverage I purchased. Admittedly, there were some insurance purchases made over the years that we either avoided altogether or just purchased the cheapest option we could find so we could keep more money in our pockets.

In reality, we persuaded ourselves to be satisfied with little or nothing in terms of insurance coverage because we were deep in debt and barely making it from month to month at times. We were satisfied with “good enough” without realizing that what we had purchased was anything but sufficient for our needs. Bankruptcy and ruin was only a minor disaster away.

When, Not If, Disaster Strikes

Dave Ramsey teaches that the purpose of insurance is to transfer risk. Insurance is an added expense and is rarely exciting, but how does it feel knowing you have it when you need it? Insurance is often called “coverage” because it covers expensive financial outlays we could probably never afford on our own.

Please don’t fool yourself into thinking you can get by without these six different types of insurance. Don’t believe yourself immune or invincible from life’s unforeseen accidents and tragedies. Above all, don’t make those accidents and tragedies worse by not getting coverage now while you can.

6 Types of Insurance You MUST Have

  1. Health Insurance—Yes, this is a hot-button issue, and according to current law not something you can avoid purchasing without a penalty. I also understand that health insurance is expensive, and has become more expensive for many people over the last couple of years. Either way, you should get the best health insurance you can afford for yourself and your family. Also, check into health care sharing options that are exempt from Obamacare and see if any of them are a good fit for your family. (My family and I are members of Samaritan Ministries. We’ve received top-notch coverage and saved thousands of dollars!)
  2. Life Insurance—If you’re an adult, you need life insurance. If you have dependents who count on you for what you contribute to the monthly income, you should get ten times your yearly salary in Term Life Insurance coverage. That way, your loved ones can invest the insurance payment and live off of the interest. Even if you don’t have any dependents, you should at the very least have enough insurance to cover any unforgivable debts and your burial expenses.
  3. Homeowner’s/Renter’s Insurance—You’ve got stuff, and what happens if you stuff gets lost, damaged, or stolen? Even if you consider yourself a relatively non-materialistic person, simply replacing your basic necessities can get expensive quickly. Imagine having to replace your entire house!
  4. Auto Insurance—You should never drive around without auto coverage. You should be sure you have adequate liability coverage at the very least (the insurance portion that pays for the other person’s damages). Unless you’re driving an old clunker that you can easily replace with cash on hand, you should have adequate collision coverage as well (the insurance portion that pays for damages to your car).
  5. Disability Insurance—Try to get disability insurance through an employer or some sort of trade organization. If it’s not available, you need to look into Own-Occupation Disability. Think it through and ask yourself what would happen if you were injured in some way to make it impossible to adequately perform your occupation, even temporarily. How would you get by? Where would your income come from? You need disability to help bridge the gap when you’re unable to work.
  6. Long-Term Care Insurance—You don’t need to purchase this type of insurance until you’re 60 years old, but you need to have it on your radar. Almost 70% of people over the age of 65 will need at least a few months of long-term care during their lifetime. Do about 10 minutes of research and you’ll soon learn that long-term care can costs thousand per month!

For all these types of insurance, unless you’ve got a local broker you know and trust to shop around and find you the absolute best rates, I recommend you use one of Dave Ramsey’s Endorsed Local Providers.

Don’t put off getting the insurance coverage you need. You’ll never regret a single penny paid when the coverage is there when, not if, you need it.