Thursday, November 28, 2013

Tis the Season to Be Mindful, Not Foolish!















The holiday season is upon us. Nowadays when you look in almost any direction you see advertised holiday specials on TV and cable, at supermarkets and at local dining establishments that will be serving Thanksgiving dinner and other holiday fare. And right alongside are the Christmas gift giving promotions, new store shopping hours and special sales pricing offers for those who like to shop early. Sadly, all but a few of the big box retailers have declared "Why wait to open for the Black Friday Rush when we can open Thanksgiving Day!"

That’s right. Retailers have decided that Americans should spend even less time gathered together sharing a Thanksgiving meal and instead should opt to go to the malls and giant specialty stores and shop longer, even all-day. So, as a consumer, know what you are really up against this year. 


So, what does this actually mean for the easily swayed shopper who is lulled into choosing between a so-called sale and holiday time with family and friends? With several more hours now to shop, will this advertising tactic increase how much earlier and how much more people might spend over the holiday season this year?

Never Mind the Store, Who Influences You More?


This is a disturbing trend as it undermines the long held American tradition established in 1863 by Abraham Lincoln: established by proclamation and setting aside the last Thursday in November as a “national day of thanks.” This gave birth to recognizing a single yet very significant national day that all Americans would go on to adopt and celebrate for the past 150 years. So, the question we should ask ourselves is whether this tradition should change now for the sake of holiday profits? 



Personally, I see an unhealthy trend; a slippery slope of social acceptance and another challenge to family values and quality fellowship. I mean why stop here? We are already shopping almost 365 days a year, 24 hours a day from even the most personal places, just as some do now from their home, the doctor’s office, a laundry mat, gym, airport or other public place.

Caveat Emptor, Sort Of!


On the Harry Jackson Radio Show--which aired November 16, 2013 via the Internet on American Family Radio and Urban Radio Ministries--I offered the following Savvy Holiday Spending Tips, including on the topics of debt and debt spending. Incurring debt is a big problem this time of year, and what is worse is that retailers know it but do not care. Some consumers will spend money they do not have either beyond their cash on hand or by using credit. Either way, you should be aware, and Count the Cost! So, here are my tips and recommendations:

Don’t Ignore the Wealth Effect on Holiday Spending!


The Wealth Effect says that consumers will likely spend more when one of two things is true: when people actually are richer (objectively speaking), or when people perceive themselves to be richer. Recent stock market increases and appreciation in retirement accounts, housing and gas price reductions create for many—the perception of increased wealth. But it is an allusion! New economic highs have some thinking that their future is or, at least, feels brighter financially.


According to the National Bureau of Economic Research, “On average, a single dollar increase in housing wealth raises consumption by between five and eight cents.” In some markets real estate inventory is low and values have appreciated up 20-25%. We may even be heading towards an economic reversal and towards a seller’s market soon; at least some will promote this idea, especially during the holidays!



There is even Age-Related Spending this time of year. Young people tend to feel less of the recessionary effects of our economy if they are still living in their parent’s home. So, of course they think they have more to spend, but it is simply not true. Older Americans feel better if their personal financial status is stable or has improved. However, the confusion surrounding the Affordable Care Act (ACA) and Medicare/Medicaid is having the opposite effect on their perception of being better off today. This may prove a healthy benefit of the law's botched roll-out.

Remember that the goal of Retailers and Advertising are to "Prime-the-pump of holiday glee" as early in the year as possible. K-mart will open 6 am; Target and others between 5 and 6 pm Thanksgiving Day. WalMart recently announced it will remain open all day on Thanksgiving. So, there is accommodation here for every type consumer, right? How convenient!

I see it a bit differently. First of all, time spent with Family, Friends, etc. on Thanksgiving Day should not be intruded upon with tantalizing (shopping) offers. With so little time invested in this rich tradition called Thanksgiving, what are we really saying about social gatherings and time well spent together? 

Accepting that some will shop, and shop, and shop more this holiday season, here is my general advice: If you are a cash shopper, take a moment to assess what you can actually afford to spend over the holidays. There will be many kinds of social events such as parties, dinners, office gatherings etc., and there are still gifts to be purchased. So you must Count the Cost!

I suggest you look at the last 3-4 months of your personal spending and determine what amount—if any—has been available at the end of each month for discretionary spending. If the assessment shows no discretionary funds available each of those months, then that is what you have available to spend during the holidays. Zero dollars! You might find that you can adjust your other budgetary expenditures, but there is no new or additional money to spend. That is just sheer—and I hope—acceptable fact.

If you intend to charge your holiday gift spending, please don’t! Sure, you may have reduced your credit card balances during the rough recession, so why go back to increasing your debt? If you can afford to pay your balances in full over the next few months, then why not use any available cash instead? In this economic season, even family and friends should understand if your gifts are a bit more modestly priced this year.

Most Importantly, Remember the True Reason for the Season


Commercialization Versus Christ’ Birthday - Most retailers rely on making their profit for the entire year during the Thanksgiving and Christmas buying season. So they will promote anything they think will stimulate impulse buying and sheer exuberance in spending. They care nothing for the consumer or the real Reason for the Season!


We Christians must not forget our reason to truly celebrate Christmas, as it is when we remember the birth of our Lord and Savior Jesus Christ. We must “push back” against the advertisers and retailer’s influences in motivating actions for the wrong reasons! Accordingly, consider these ideas:

  • Adapt a Birthday Buying Mindset Instead of Runaway Exuberance -
    Former Fed. Reserve Chairman Alan Greenspan penned the term Irrational Exuberance when unable to fully explain why the stock market was booming back in the late 90’s and early 2000’s. What Mr. Greenspan saw was irrational behavior by Americans who were spending on anything they could, especially stocks. We now know that there was intentional stimulating of consumers spawned by toxic mortgages and sub-par underwriting of mortgage loans, among other forms of economic stimulus.
  • Since Christmas is Celebrated as Christ’s Birthday, What Is Considered an Appropriate Gift?
    What, for example, would you spend to buy a family member, friend or colleague a gift on their birthday? More specifically, what would you give to a King, that is, someone who owns everything? And what would you consider appropriate for that reason?

    Consider Gifts with More Than a 30-Day Expiration


    Novelty gifts have their place and can add a personal, even humorous touch to the holiday exuberance. Is that enough reason to give them to someone at Christmas? Perhaps a gift that can endure for a longer time-frame or even a lifetime might also work this holiday season. Consider these:
    • First and Foremost, Acknowledge the Source for All Gifts - Psalm 24:1
      Since God is the source for our prosperity, we should think of what He may expect us to do with what He has entrusted to us! Remember the Parable of the Talents (in Matthew 25).
    • Invest in Someone’s Purpose - (Jeremiah 29)
      The Three Wise Men brought what some might consider practical gifts to the baby Jesus. But, have you ever stopped to consider that the Gold, Frankincense and Myrrh were tradable commodities that would enable Mary and Joseph to care for Jesus for a very long time?
    • Help Someone Enjoy The Holiday More -
      Personal charity towards others or on their behalf is a gift that keeps on giving. What if you had a friend that has suffered a job loss and cannot pay their debts? Perhaps an appropriate Christmas gift would be to help them pay down or payoff one of those utility bills or other financial obligations … maybe as part of pooled effort with others! The recent devastation in the Philippines and parts of our nations’ own mid-western states has left families to deal with death, lack of housing, a need for clothing, food and medical care.
    • Underwrite Someone Else’s Gift-Giving Desire -
      Maybe giving to the Red Cross, Salvation Army or other charities on someone else’ behalf is a good way to express your love and concern. Or, what if that same person loves animals and is quite charitable towards their cause. How about a donation to the SPCA or Humane Society on their behalf? Why not? You can give them a sweater at any time!
    • Consider the Future Value of Your Gift -
      How about a cashmere sweater at $75 versus purchasing 1 Share of Proctor & Gamble @ $85 (paying a 2.90% dividend yield). Which is better? The stock share could continue its growth at an annual rate of 10-12% plus pay a quarterly dividend. Or, what about gifting an investment in Exchange Traded Funds (ETFs) which closely perform as the Dow or S&P, which are soaring.

      Even a musical instrument would provide more potential for a Return On Investment than a cell-phone or electronic game would. They are good gifts at times, just not always right for Christmas when prices tend to be higher than at any other time of year…
    • Consider Estate Type Gifting; Inheritance -
      Talk about a gift that keeps on giving. Imagine being given several stocks (or equivalent shares) or an investment property as a Christmas gift? There are some gift tax and possibly capital gains tax issues that may need to be considered beforehand, but the big idea here is sharing the future and allowing another to see their role in it through your very special gift; a gift given, I might add, at the most precious time of any celebrated holiday. It really says You Are Special.
    • Commit All Big-Ticket Purchases to Other Occasions -
      Christmas invokes lots of Impulse Buying often met with buyer’s remorse afterwards. Generally speaking, even the lowest priced bargain items at Christmas can be purchased for the same sale-price or less sometime later in the year. For example, Wide-screen TVs during Super Bowl; or laptops at Back-to-School time, etc. Retailers know this, and so should you!
    • Finally, Remember to Celebrate Jesus!
      He is and will always be the true reason for the season!



    ENDING THOUGHTS:


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