Big Ticket Items Mean Big Time Debt

Enticing deals makes it easy to splurge on Black Friday and Cyber Monday

It’s no secret that accumulating debt has a snowball effect as interest accrues. Before you know it, a small balance that you can reasonably pay off in a short period becomes a balance that’s beyond your reach.

While there is no denying that deals abound over Black Friday weekend through to Cyber Monday,  it also creates a perfect storm for impulse shopping- which is possibly the single biggest threat to your financial health and credit overuse. This is the season when those big ticket items, like big screen TVs and home computers seemingly fly off the shelves. The problem is that frequently these items are paid for with credit.

  • Recent data from Statistics Canada show that 66.81 percent of computer hardware and software, telephones and home office equipment and televisions and audio and visual equipment at electronics stores sales for the year happened in Q4 2014.
  • Other retail sectors that can thank Black Friday and Cyber Monday for a spike in sales are clothing and accessories and sporting goods, hobby and music stores (both just over 10 per cent).
  • A recent report from credit agency TransUnion that Canadian credit card debt reached a two-year high in the last quarter 3.04 per cent to $3,745.

 

If your budget is tight or if you are already carrying debt, Black Friday weekend can be problematic, financially,” says Jeff Schwartz, executive director at the Consolidated Credit Counseling Services of Canada.

You see particularly large discounts on things like electronics coupled with attractive ‘buy now, pay later’ programs. If you can’t buy now with the cash in your wallet, you are going to pay later- in more ways than one. ”

Be immune

A big part of Black Friday weekend is the hype.  You’ve received the flyers; you’ve got the e-mail promos; you’ve seen the T.V. footage of frenzied crowds licking their chops waiting for stores to open.

Be aware of all of this. It’s designed for a single purpose- to appeal to your heart (your inner shopper) and not to your head (your budget). You are meant to feel the urgency of now.

If you’re shopping this weekend, have a bulletproof plan that includes a list, a timeline and a budget. Don’t be influenced by outside retail forces.

It’s not a deal if you don’t need it

Buy three! Get one free! Do you ever feel like something is such a great deal, that you’d actually be losing money if you left in on the shelf?

It’s kind of basic, but worth repeating. If you don’t expressly need an item, you’re spending money you don’t have on items you don’t need. It might feel like a deal in the moment, but when it comes to managing your budget, the math is flawed.

Don’t take their credit card

You are going to be offered multiple department store credit cards at the checkout. Save 10 percent today (but pay in the neighbourhood of 30 percent on your purchases later). Don’t do it.

Be particularly wary of these programs at appliance and electronic stores. You may go home with the big screen TV or computer, but you are also going home with hidden charges and administrative fees. If you really have your heart set on something, why not spend the next year putting cash aside and then being first in line at next year’s Black Friday? You know there will be deals!

 

 

Are your spending habits and credit use creating a debt load that is growing fast? We can help you take control and help you manage your debt effectively. Call one of our trained credit counsellors or check out our free online debt analysis tool to get started.

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