SOURCE: Oak River Financial Group

November 20, 2013 17:21 ET

Don't Let Black Friday Put You in the RED

4 Ways to Avoid January Credit Card Woes

THE WOODLANDS, TX--(Marketwired - November 20, 2013) - Holiday decorations grace your local supermarket and Christmas carols lilt through the malls -- retailers are gearing up to grab a piece of your pocketbook this holiday season. Black Friday shopping is as American as turkey and pumpkin pie, but much like those extra pounds we put on during our end-of-the-year festivities, the bills we incur don't magically disappear come January. 

According to the National Retail Federation, holiday shopping is predicted to rise a healthy 3.9 percent to $602.1 billion in 2013, higher than the typical annual increase. American consumer culture is alive and well this holiday season, despite less-than-stellar economic gains and job growth for the country this year. Americans love to buy, and without a deterrent, they will happily go along their spending ways.

"There are only a handful of people who can afford not to have a budget," says Aaron Freeman, President and CEO of the Oak River Financial Group in The Woodlands, Texas. He believes that discipline is the guiding principle to overall financial success, even though it can be difficult this time of year. "The holidays are a unique time to spend money and give to others, but it's important to keep yourself under control."

Four easy steps can help you have the holiday you want, without all the New Year's debt you don't.

1. Create a simple budget. First, consider what you can afford to spend -- not what you want to spend, but what you can actually afford. Then jot down all the people on your list. Match the two together, and you have your budget. If you have $500, for example, 50 percent of it could go to gifts for your kids, 25 percent to your spouse and 25 percent for all others. A simple budget will get you thinking realistically about what you are able to give. "People today have a desire to give and it's in people's nature to do good things," Freeman says. "But we can put a little more into the thought of the gift, not just the price." 

2. Make a list of each holiday purchase you make and its cost. Once you have a budget and a plan, it is important to record every penny you spend on paper so you can see when you are beginning to deviate from your goals and adjust your shopping accordingly. If you are going to be disciplined in your spending, you must hold yourself accountable. You will thank yourself in the New Year.

3. Know what you are going to get when you go in a store. Walk into an American retailer today and take a look around the cash register area: retailers know that consumers are often driven by impulse, and they plan their stores for temptation. If you want to get Grandma a coffee maker at Kohl's, go straight to housewares, buy it and leave. Don't put yourself in a position to fail in your financial goals by meandering through the store lured by items outside your budget. 

4. Use your credit card as a tool, not as a fairy godmother. Successful people manage their debt wisely. Borrowing the money to buy a house with very low 4 percent interest rates can be a smart deal. Buying a sweater for $100 on your credit card when you know you can't pay it off in 30 days may not be such a winner. Over time, the 15 to 20 percent in interest you will accrue will make the actual cost to you much higher over time. Use your credit card with the intent to pay off the balance quickly, or don't use it at all. 

"If you can do what nobody else is willing to do in the short term, you can have what everybody else wants later in life," Freeman says. "You can go on all those dreamed about cruises and trips, and have nice cars when everyone else says, 'I don't have enough money for retirement.' "

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