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Spend Money the Smart Way This Holiday Season on KNX 1070

Spend money the smart way this holiday season. Charles Feldman and Mike Simpson, hosts of KNX 1070 In Depth, interview award winning financial planner Stephen Rischall, to discuss smart holiday spending habits and how to avoid mountains of debt so you can be happy this holiday season and next. Stephen Rischall KNX 1070 Interview on air image

Charles Feldman: Only 38 days till Christmas, but a lot of people who will be heading out to do their holiday shopping this year, well guess what, they’re still paying off bills from last year.

Mike Simpson: With us now is financial planner Stephen Rischall, founding partner of 1080 Financial Group here in Los Angeles. Stephen, a survey by Nerd Wallet says about a quarter of those asked admit they overspent last year and about the same number are still paying off their credit card bills. How can these people ever catch up?

Stephen Rischall: Yeah well that’s a huge problem and first things first, a little public service announcement, people need to stop telling themselves that when you buy something on sale you’re saving money. That’s exactly what the retailers want you to think, but you’re not saving money when you buy something on sale, you’re simply just spending a little less than you would have otherwise spent.

Mike Simpson: Okay, but as you know, a lot of people are going to do that. They’re going to end up spending money for that sale that they don’t have probably. They’re going to charge, so how can you resist that temptation when people go to these stores and they want to buy gifts for their aunts, their uncles, their kids, their neighbors? How do you stop yourself from doing that?

Stephen Rischall: Yeah, I think there’s three things that anyone can do to stay on track with holiday spending and that’s so that they don’t have to end up still paying for it next year like you were just talking about. First and foremost, you need to have a budget. It sounds simple, but not enough people do this. The point being, you want to tell your money where to go, not wonder after the fact where it all went. So, based on your situation, you need to come up with a realistic dollar amount that you can afford to spend on the holidays. And by afford, we mean not going into debt, not forced to put it on credit cards; you have to remember, holiday spending is more than just presents – it’s traveling, it’s feasting, it’s activities with family and friends. Make it fun, right? Have a budget, don’t be negative about it. Think of it as a game – if your budget is $300 on gifts and you want to do the whole Black Friday or Cyber Monday thing, that’s fine, but your budget is $300. You need to stick to that plan and you win this game when you spend less than $300 on those gifts.

Mike Simpson: Stephen, is this problem getting worse year after year or has this always been a problem? Or is it getting worse? I guess is what I’m asking.

Stephen Rischall: Yeah, it’s always been a problem, I would say. It has been exacerbated, things like social media and marketing, right? We see more of our friends and people in our networks you know really beautifying ‘oh look at this new gift I got’, ‘oh look at this wonderful feast or trip that I’m on’. It’s in front of us more, the marketers are getting better at getting things in front of us, right? Those sales, it’s a dirty, four-letter word. They’re much better at getting us to part with money from our wallets, so the next piece of that is you have to have a plan, you have your budget, you need to have a plan. Don’t walk into that grocery store or into the mall this season without a plan. You need to have that list of what you’re cooking, who you’re buying gifts for, and take it a step further and integrate that list with that budget so you don’t overspend on those items and you can stick to that spending plan.

Mike Simpson: Let me circle back a bit to where we began for people who are still paying off mountains of debt from last year’s holiday season. What can they do?

Stephen Rischall: Well, if you are already in that hole, you need to really skip the extras this holiday season. It’s nice to splurge on ourselves, but look, if you’re already in that situation, you need to skip those extra pumpkin spice lattes. I know they’re amazing, but you got to skip them this season, you’ll save yourself a few bucks there, and you know what, at the end of the day, if you ask me, the best thing about the holidays is spending time with family and loved ones, there’s nothing more important than spending time and I think that all of your family and friends will love you just as much if you show up and spend time with them and forget about spending money on them this holiday season, they’re still going to love you.

Mike Simpson: Stephen, my colleague, Charles Feldman, he may cut back on the pumpkin spice lattes, he’s not cutting them out though. Stephen, thank you so much. Again, that’s Stephen Rischall, founding partner of 1080 Financial Group here in Los Angeles.

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