Being generous is an admirable trait. But it is indeed possible to be generous to a fault if excessive giving compromises your own financial stability.
This distinction is especially important during the holiday season when millions of people disregard financial common sense to participate in Black Friday, the mother of all shopping days, according to the National Foundation for Consumer Credit, a national nonprofit organization that aims to promote financially-responsible behavior.
"The problem with this practice is that financial reality is just around the corner, never failing to emerge in January as a mailbox full of credit card statements,” the organization says.
With the countdown to Black Friday underway, the NFCC offers some important tips for consumers:
- Don’t pile new debt on top of old debt. Consumers who carry over, or revolve, debt from month to month lose the benefit of a grace period and instead begin to incur interest expense on new purchases immediately.
- Don't pay interest on interest. When debt is carried over from month to month, interest is added to the balance. This interest adds up over time, creating another barrier to staying debt free.
- Avoid late and over-limit fees on credit cards, which can cause debt to grow to an unmanageable level.
- Always make payments on time. Late payments can lead to collections, lawsuits, judgments and wage garnishment, all of which can have very adverse, long-term consequences.
- Be cautious about overspending. This habit can lead to desperate choices such as payday loans, pawn shops, bankruptcy and debt-settlement services.
In a statement, NFCC spokesperson Gail Cunningham said the time for financial awareness is now, not after the damage is done.
"Consumers need to ask themselves if taking on unmanageable debt this holiday season is worth putting their financial well-being at risk," Cunningham said.
The answer: no.
Have you set a budget for holiday spending?
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