Resisting the temptation of Black Friday

ENGLEWOOD - With a spread of retail store advertisements on his desk, A & I Financial Services Certified Financial Planner Karl Frank admitted to being a bit tempted.

"It's exciting, isn't it," he said. "My goodness, golly. It makes me want to separate from my money!"

Frank knows that a lot of people are enticed by store advertisements promising deals unlike anything shoppers have ever seen before. But Frank says excited shoppers don't always realize the financial seriousness of shopping.

"We get so enticed with advertisements like this. And we think we're saving money. And we forget that, in order to save, you have to spend," Frank said.

Frank, who also works with the Financial Planning Association of Colorado, says lots of his colleagues have been helping clients who have lost their jobs or had their hours cut back.

"This is a skinny Christmas, not the fat Christmas they've had in the past," he said.

Therefore, some people don't have the money to spend on shopping this year. And Frank says they shouldn't.

"If you don't have the money, find a way to enjoy the holidays without it," he said. "If I can encourage you to do anything, it is don't spend more than you have."

Shopper Susan Squayer says she thinks more people who are shopping this year are keeping a closer eye on their funds.

"It's good to manage your money. People have to be cautious, and I think you see it in their attitudes," Squayer said.

Frank says that anyone who uses a credit card for Christmas shopping should make sure they can pay the balance off at the end of the month. A number of credit companies have hiked up their interest rates, sometimes without cardholders even realizing it.

"Credit card rates are going up. The amount of money they'll let you have is going down.... It's tough," he said. "Don't wreck your credit over trying to make someone in your family feel better."

Frank added that, at a 29 percent interest rate (which isn't unheard of for some credit card accounts), a $1,000 balance will turn into a $4,000 debt in five years.

For those who can still afford to shop, Frank suggests using a popular money management technique called "budgeting by an envelope." That's when shoppers leave their credit cards at home, put their budgeted amount of cash in an envelope and write down how every dollar is spent on the back of that envelope (of course, keep the envelope in a secure place). Once the cash is gone, the shopper has no choice but to stop spending.

"That can be a great mental and physical trick to avoid spending too much," Frank said.

It's a technique Terry Brahmsteadt used while shopping on Wednesday afternoon.

"My wife and I allowed ourselves cash. We're not using credit cards. And when it's gone, it's gone," he said.

Frank also suggests that shoppers try to realize when they're making impulse or emotional purchases.

"Check your emotions and say 'Am I enjoying this?' ... One time, in a store... I looked at people in the line ahead of me," Frank said. "Some of them were smiling. Some were stressed out... If you're stressed, maybe you should be doing something else."

Brahmsteadt said, although he's keeping an eye on his budget, he's not losing his holiday spirit.

"We're not trying to be frugal. We're just trying to be smart," he said.

Karl Frank says being smart can take a lot of people a long way, financially. He suggests shopping under your budget and putting the leftover money into a savings account or a certificate of deposit, where it can accrue interest. The extra money can be used for holiday shopping next year, when the economy might be a little better. In the meantime, he says there's nothing wrong with having a simple holiday.

"What we really need to remember is what really matters during the holidays," Frank said, "family, food and maybe football!"