Black Friday, Cyber Monday, Bankruptcy Tuesday

I just got back from a quick trip to the US where Black Friday and Cyber Monday advertisements were everywhere.

Shopping crowds Black Friday 311 (photo credit: REUTERS/Andrew Burton )
Shopping crowds Black Friday 311
(photo credit: REUTERS/Andrew Burton )
You may have heard of Black Friday and Cyber Monday. There’s another day you might want to know about: Giving Tuesday. The idea is pretty straightforward. On the Tuesday after Thanksgiving, shoppers take a break from their gift buying and donate what they can to charity. The Bill and Melinda Gates Foundation and Facebook teamed up again to match up to $2 million worth of donations to US non-profits.
I just got back from a quick trip to the US where Black Friday and Cyber Monday advertisements were everywhere. Thinking that I had escaped the consumer mania getting back to Israel, the joke was on me when, after landing, I turned on my cell phone and was inundated with Israeli Black Friday ads. I was telling my oldest daughter all about the anticipation for all the sales, and she told me that she had a class trip planned and only 40% of the girls were planning on attending. When the teacher asked one of the girls why she wasn’t going, she answered, “I need to get ready for Black Friday shopping!”
On my trip, I popped into a mall to pick up a few things that I actually needed and was met by “Not yet Black Friday” sales! How bad have things gotten? Well check out this headline that ran in USA Today – “Black Friday 2018: Should you get a personal loan for holiday shopping this year?” The article spoke about how expensive holiday shopping is and that there is data that shows 40% of Americans don’t have $400 to cover an emergency but will spend way more than that on presents.
Janna Herron, who wrote the article, speaks about consumers who don’t have enough money to cover Black Friday shopping. She discusses taking out a “Holiday loan.” “Holiday loans typically come with a fixed interest rate and installment repayment plan that starts as soon as the loan funds are distributed. The loan amount generally ranges between $500 and $5,000, with a term of between one and five years.
Funds can be used for any purpose. You can often apply for these loans online, and some require no credit check before approval. Banks, online lenders and credit unions all offer personal loans.
“It’s not unusual for credit unions to advertise a special holiday loan which has a low rate that is only available on Black Friday or for a set time,” said Mike Schenk, chief economist of the Credit Union National Association.
No offense, but this is insane. I am not against buying things. And if you need to buy something I am all for getting the best deal that you can. I am against buying things that you can’t afford and most probably don’t even need. If we have gotten to the point where people go into debt to take advantage of a good deal what does that say about us as a society?
Ash Exantus, financial empowerment coach at BankMobile, puts it best. “Shopping, especially on Black Friday, is psychological warfare. You are literally in a battle between you and your pockets versus retailers and marketers. They know that many can’t resist deep discounts and that’s why you MUST be psychologically ready to say no and close a blind eye to what is not on your list, what you can’t afford and what you can’t buy with cash.”
The way to take advantage of Black Friday is to live within a budget. If you need to buy clothes or a new fridge, and you have set aside money in your annual budget for such purchases, then go ahead and take advantage of the amazing sales that are available. Just like when going to the supermarket, make a list of the things that you need, and stay focused on purchasing only those things.
But to buy a new TV at 40% off, when there was nothing wrong with your old one is not savings. It means you spent a little less money on something you didn’t need. At the end of the day that is not considered savings, no matter how you spin it.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
Aaron Katsman is the author of Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing.; [email protected]