Interesting Article: Forget Christmas Shopping

[Luv2BeFrugal]

Forget Christmas Shopping

I thought this writer had some good points... We're planning to scale back even further from what we're doing this year (which is already greatly reduced). Most of the people we know don't want a bunch more "stuff" anyway...

I like his college savings plan idea for kids. Sure wish I'd gotten something like that!

[frugalwarrior2]

Can't get link to work.

[AnW819]

Me neither....

[bumplett]

Joel Waldfogel, author of "Scroogenomics: Why You Shouldn't Buy Presents for the Holidays",

Has anyone read this??

sounds interesting.

I think I'll look for it during my next trip to the library.

yes, the link worked for me, cute little article - though I don't think my kids would agree. :giggle:

[Lady_V]

Try Christmas Saving, Not Christmas Shopping

Contemplating a trip to the mall this weekend? Stop right there and step away from the plastic.

With unemployment still high and salaries in suspended animation, few people are going crazy on holiday spending this year. But even those planning to spend modest amounts should take some time to think about what their shopping budgets really buy, and who really benefits from Christmas gifts.


Shopping in the stores? That sweater set may bring more joy to a retailer's balance sheet than it does to your sister-in-law. Look at the markups for major retailers. They don't advertise this, but according to company filings, Nordstrom's gross margin comes in at 35%. Ditto Neiman Marcus. At Tiffany & Co., it's a thumping 57%.




Joel Waldfogel, author of "Scroogenomics: Why You Shouldn't Buy Presents for the Holidays", argues that 20% of the money we spend on gifts is pure waste. "Per dollar spent, the things we receive as a gift are 20% less valuable than the things we buy ourselves," he said in an interview this week.


But the real cost is even higher, because the true value of money is what you would have if you had saved it instead of spending it.
It's plenty. Mr. Waldfogel calculates that the annual spike in spending around the holidays is about $65 billion nationwide, or roughly $600 per household.



Invested at around 4.5% over inflation, that $600 would grow to $930 in today's dollars over ten years. It would grow to $1,450 over 20 years and nearly $3,000 over 35. That's one holiday's spending.


If you saved that $600 every year instead of spending it on gifts, after ten years you'd probably have an extra $7,700. After 35 years you'd have $51,000—not bad, even when adjusted for eventual inflation.


If you must put something under the tree, consider cutting back: even the 20% of Christmas spending that is pure waste would grow, including interest, over 35 years to more than $10,000.
Cash or gift cards at least avoid throwing away that unwanted 20%, because they let the recipients buy their own gifts. (Though it's widely estimated that gift cards, too, have about 10% wastage.) It's funny that cash is considered somehow déclassé. You wouldn't order for somebody else in a restaurant. Why do we presume to choose their sweaters or cellphones or golf clubs?
If you have young children, here's an idea: Open a 529 tax-sheltered college savings plan for each one (see savingforcollege.com for more details) and let family and friends know that contributions of any size would be terrific gifts. Nobody knows what to buy someone else's children anyway. And money invested in a college plan should double—in real terms—over 18 years.

[CountryChica]

Interesting article ... thanks for sharing!