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American Morning

Planning For The Holidays

Aired August 22, 2001 - 11:39   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: Yes, yes, you're hearing the right thing, and yes it is August. But, believe it or not, folks, it might be the right time to start your holiday shopping.

The average American family spends $1,700 during the holidays, and many of them end up paying those bills off for months to come afterwards.

Joining us now from Las Vegas with some tips about shopping now and saving later, is Kathy McNally. She's with the National Foundation for Credit Counseling.

Good morning. How are you?

KATHY MCNALLY, NATL. FDN. FOR CREDIT COUNSELING: Good morning, Leon. Nice to be here.

HARRIS: I am glad to have you with us, although my wife is probably one of these people who says that, you know what, anytime is a good time for shopping.

But, come on, isn't it a bit early to be talking about going Christmas shopping? It's August, come on!

MCNALLY: August is actually a perfect time to start planning for the holidays, not only for holidays 2001, but even for holidays 2002.

The average households spends between $1200 and $1700 on the holidays, so think of it as a major expense and plan accordingly, just as you would plan for an appliance purchase or a vacation. This is very similar. So plan, and budget and save for it. And now is the time.

HARRIS: You know, that's easier said than done, though. Isn't it? I mean, I know when I go Christmas shopping I happen to see something, and then I think of who I want to get it for. I don't necessarily always go out with a predetermined list of everything. Doesn't that the sort of interfere with that?

MCNALLY: Well, a list, as simple as it sounds, is a very key part of this. Making a list, checking it twice, putting down names and the kind of gift you would like to buy, and an actual amount for each person. Then, taking that list with you -- don't leave home without it -- can really be instrumental in making this a fabulous holiday.

HARRIS: All right. So, what about when the decision is being made, when you have to make it between credit versus cash?

MCNALLY: Well, it's always advisable to pay with cash, if possible. But some of us use credit, and the idea is to use it responsibly and be able to pay it off as soon as possible.

Actually, every year, our counselors around the country experience what we call a January jump. Those bills come in, in January, and we might have forgotten about the expenses that we've made in the month of December. I wear a pin during the holidays that says, "ho-ho-ho," if you turn it upside down it says, "oh-oh-oh." That's exactly what happens to many of us in January.

HARRIS: That's a good point. But you know what, I have to ask you because I am one of these kind of people who is concerned about warranties and things like that. When you buy them this early, doesn't that throw them off?

Plus you get extra protection from the credit card companies, for instance if the product doesn't work. What if you have to wait so long before actually giving it and finding out whether it works or not, and all of that?

MCNALLY: Well, August is not that far from the holidays. And if you think of it in terms of the Thanksgiving holiday, whether you are celebrating Christmas or Hanukkah, getting into the new year. Very often these warranties do extend for a longer period of time, a year or two.

And again, paying off responsibly -- if you buy something in August and pay it off actually before the December holidays, what a great feeling! What a good holiday you'll have.

HARRIS: Yes, but you know so many of us are doing shopping on- line now, and there you can only use credit cards. And doesn't that open up the door there for some potential trouble?

MCNALLY: Well, credit cards facilitate the American dream in many ways. It's when it becomes the American nightmare that people come to see our counselors. But, planning and budgeting, and doing this in a thoughtful way, makes the internet a great tool.

For example, when it's the last time you rented a car, or stayed in a hotel, or flew on an airplane without a credit card?

HARRIS: Yes.

MCNALLY: It facilitates a lot of this for us.

HARRIS: Finally, you say there are hidden costs that people might not think about during the holiday shopping. What do you mean by that?

MCNALLY: For example, presents for your pets, or boarding cost for your pets, if you're going to travel during the holidays. Greeting card expenses are something that we think about, and yet the postage on those can be a hidden cost. Long-distance telephone calls can add up.

Our counselors right now, as we speak, are helping people pay off their debt from holiday spending two years ago.

HARRIS: Yow!

MCNALLY: So these expenses really do add up.

HARRIS: Yes, they really do. That's a really, very real problem for very many people.

Kathy McNally, thank you very much for your time this morning. We appreciate you joining us, 126 days from Christmas.

MCNALLY: Thank you so much.

HARRIS: Take care.

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