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The Best Little Money Book

Tip of the Month

Holiday Spending

Normally at this time of year we are discussing only the spending that goes on during the holiday season. Not this year.

Last year, a number of major retailers had their POS (Point of Service) machines hacked and in the last year over 80 million identities have been stolen. This year all of us not only want to pay attention to what we spend our money on but also how we pay for our purchases.

In both instances, CASH should be king. It is an easy way to track your spending because when the cash is gone, your holiday shopping is done. Using cash also eliminates the use of any abstract form of money; i.e., debit or credit cards. For the majority of American consumers, this is a foreign concept so we need to be careful how we spend and pay for our purchases. If you aren't using a credit or debit card, you know your identity won't be stolen when your favorite store is hacked.

Let's review your holiday spending plan. Use a list, determine how much money you can spend, and shop for the best price both online and at "sticks and brick." Remember to include cost of delivery in the cost if you are ordering online. Above all, do not give in to impulse buying. Stick to your budget so you won't regret it when the bills come in January.

When buying this year cash is best. Credit cards are safer than debit cards not because of cost or convenience but because of the way money moves. When you use your debit card, the money moves immediately from your bank account to the retailer. When you use a credit card the money does not move until you pay the bill. This "float" allows you some time to pay your balance.

However, we recommend that you do not use debit cards. If thieves do strike, your debit card information is extremely valuable to them. Your bank account can be wiped out immediately. While banks will cover unauthorized credit card charges if you notify them, there is no such protection for debit cards.

This means that when buying on-line you always use a credit card. If you use your debit card, you need to check your account on a regular basis.

Finally, if you are using I-Pay, Google Wallet or the mobile PayPal app, these financial systems believe that they have eliminated the identity theft possibility. But you don't have to worry about that if you remember that cash is king.

From The Money Team, happy holidays and remember: It is not the price of the gift but the feeling with which it is given.