Photo By Arthur Mondale | A shopper purchases holiday ornaments Nov. 16 at the Army & Air Force Exchange on the...... read more read more
JOINT BASE MYER-HENDERSON HALL, Va. - Talk of holiday budgets is as popular as holiday sales both at area stores and online. But financial counselors at Joint Base Myer-Henderson Hall have an important question: What do you want your bank balance to look like on Jan. 1?
JBM-HH Army Community Service Financial Counselor Jin Lim and Marine Corps Personal Financial Management Program Counselor Jim Murphy said there is still a significant population of service members who contribute to the economic phenomenon called the “latte factor” “incrementally mindless” spending that, unbeknownst to the spender, adds up.
“If you spend $5 per day on a latte - it’s $25 per week, $100 per month - and $1,200 per year,” Lim said.
In addition to the other frivolous expenditures that can be added to the equation, Lim estimates that sufferers of the "latte factor" are also more prone to avoid planning for the holiday shopping season and overspend.
She first suggests that anyone who still has purchases to make, plan before the next purchase and immediately set parameters.
“Make a list, set a budget and don’t be obligated to give every single person a gift,” Lim said.
But according to Murphy, it’s not that simple. He believes most people under the age of 60 require “motivation” to manage their income, expenses, liabilities and assets, during the holidays and well after. Otherwise, they’ll remain “immature financial managers,” both officers and enlisted in their first term of service, are more susceptible to this risk, Murphy said.
“People budget for monthly bills and credit obligations, but they don’t pay too much attention to other categories and subcategories of expenses,” Murphy said. “They aren’t very good planners.”
In addition to advising Marines in maintaining their personal finances, Murphy is also an active financial counselor and coach within the Transition Assistance Program (TAP); retirees and chose choosing not to re-enlist must complete a pre-separation checklist, financial planning seminar and submit a 12-month budget. He encourages his clients to plan long-term and invest time managing their budget, cash flow and net worth.
While beneficial to retirees and those separating, there are many others who should seek the counsel of a financial specialist, according to Murphy.
This is particularly important during the holiday season, he said.
“We know that people make good decisions when they have good information,” Murphy said. “But it’s hard to make that decision until you learn how to budget your money.”
Holiday spending dont’s
• Don’t be Santa: Lim suggests making a mutual agreement with family and friends in regards to giving gifts. In fact, her family reserves holiday gift purchases for children only, no gifts are purchased for adults. Whereas Murphy adds, “It’s the meaning of the gift that’s important, not the size of it.”
• Don’t limit your gifting potential: Instead of buying gifts, make handmade items, crochet, or bake when you can only afford a small budget for presents, according to Lim.
• Don’t forget about shipping costs: While shopping online is easier for some folks, there are shipping costs to consider, if it isn’t free. And be sure to know the address of receivers of the gifts purchased, to avoid additional shipping costs, according to Lim.
• Don’t avoid the perks of credit, but avoid overcharging: The Military Star Card, for example, is offering Your Holiday Bill Is On Us! sweepstakes worth hundreds and thousands of dollars through Dec. 31. Both Lim and Murphy advise people to take advantage of credit card promotions, but within reason.
“Perks to credit cards can be really good if managed wisely,” Lim said. “Only spend up to the amount that you can pay off in full the next month, otherwise you risk paying the interest.” Lim also advises limiting the number of credits cards used to two or three.
“Don’t use or open 10 different credit cards because that’s hard to manage,” she said. “How will you keep up with dates of purchases, balances and interest rates?”
• Don’t be afraid to seek financial help: “Credit is not real money - the first time a person is carrying a balance from one month to the next, or they haven’t paid off the entire month’s accumulated spending - that is when they need to see a financial counselor. That’s a clear indication that the person is not making informed financial decisions,” said Murphy.
Holiday spending takeaways
Service members the Pentagram spoke with were willing to share how they manage their wallets and compulsions to splurge. Many of them told us they had to develop a plan and adjust to spending smarter.
“There’s a lot of different people I got to buy stuff for,” U.S. Army Pfc. Benjamin Feldbush said. He’s able to cap his budget to no more than $2,000 by only purchasing meaningful gifts for the people in his family they can use.
“I more of less buy things people need, stuff they can use,” he said. These sentiments were echoed by U.S. Army Sgt. Ryan Price, who’s running a full household. He stressed the importance of being “frugal, innovative and creative.”
“I’ve budgeted for $1,500 to $2,000 at the most,” U.S. Army Sgt. Ryan Price said. “I have four kids and it’s a compilation of spending and making stuff.”
Price said he believes people risk paying more in the long run, if they don’t take the time to ever budget and plan accordingly.
“It’s usually a disaster, because instead of spending what I saved [in a separate account for holiday spending] - $1,500 to $2,000 - I may end up spending $1,000 over.”
But service members like U.S. Army Pfc. John Marrero, plan to cut his budget by an entire fourth of what both Feldbush and Price plan to spend.
In fact, he’s only spending “$200 to $300,” he said.
In addition to choosing not to return home to southern Texas to save on holiday travel costs, Marrero said he thinks it’s too much of a financial burden and hassle to ship gifts to loved ones back home as well. He plans to buy gifts for only his girlfriend and a very short list of local friends.
“Think smart and know your budget,” Marrero said. “Know how to disperse it and determine who the top priority is. Who are the top three people to buy for? And after that, give them all something small.”
| Date Taken: | 12.03.2015 |
| Date Posted: | 12.09.2015 19:50 |
| Story ID: | 184057 |
| Location: | JOINT BASE MYER-HENDERSON HALL, VIRGINIA, US |
| Web Views: | 22 |
| Downloads: | 0 |
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