When Bernadette Joy and her husband were paying off $300,000 in debt, she didn’t stop shopping altogether. Instead, she came up with a unique measure of cost per use to help make better decisions. The same approach could help consumers avoid purchase regrets this holiday season.
When Bernadette Joy graduated with her MBA in 2016, she and her husband had about $300,000 in debt, including student loans and a mortgage balance.
By 2020, we were debt free.
Joy was seeking financial independence, but financial tips such as “Eat beans and rice, don’t enjoy anything, and shopping is terrible” didn’t resonate with her.
Instead, Joy found more creative ways to shop without feeling guilty. So she came up with something she calls the “$1 rule.” She explains this in detail in her new book, Crush Your Money Goals.
“The $1 Rule is my spin on cost per use or cost per wear,” says Joy, a financial coach and debt repayment expert. “But I simplified it further and said it’s OK to buy something that costs $1 per use.”
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For example, when a friend was looking to buy an expensive sofa, Joy used the dollar rule to determine that it would be worth as long as she kept it for five years and used it every day.
Joy said this rule personally helps her avoid buying low-quality items or things she doesn’t use often.
For example, she was eyeing warming plates for entertaining, but realized the $30 cost wasn’t worth it since she would likely use them twice a year.
She says the “$1 rule” also comes in very handy when you’re trying to buy a gift for someone you’ll really appreciate during the holidays.
Joy said she uses this rule whenever she buys a gift for someone, asking herself, “Will this be something I’ll use often?”
Impulse buying can lead to regrets
This year, a record 183.4 million people are expected to shop both online and in-person during the five-day period between Thanksgiving and Cyber Monday, according to the National Retail Federation.
More than half (57%) of consumers say they plan to shop at that time because there’s a deal they can’t miss, a recent survey by an industry group found.
A recent study from Bankrate found that bargains can lead to impulse purchases, with 54% of adults making at least one impulse purchase last holiday season.
However, such impulse purchases can lead to regret.
Another Bankrate study on online purchases triggered by social media found that 57% of consumers regret at least one of those transactions.
Ted Rothman, senior industry analyst at Bankrate, says it’s okay to splurge once in a while, as long as you make room in your budget beforehand.
“You don’t want to continue paying for this holiday season a year from now,” Rothman says.
At that point, 28% of people still have credit card debt from the 2023 holiday season to pay off, NerdWallet found.
Overspending remains a real possibility for many households, he said, as prices have increased by 20% since the beginning of 2021, while wages have only increased by an average of 17% during this period.
Although interest rates are coming down, the average interest rate on credit cards is still about 20.4%, Rothman said.
Please take a short break before purchasing
To avoid making big purchases that end up carrying a credit card balance each month, Rothman says consumers can help by taking a moment to pause before making a purchase.
Meanwhile, there are other shopping tips that will help you make the most of your money this holiday season.
Joy said choosing experiences over material things can make your vacation more memorable. For example, instead of a “Secret Santa” gift exchange, you can plan a group outing with friends.
Retailers may apply pressure with time-sensitive offers, but “there’s a good chance there’s another sale going on behind the scenes,” Rothman said.
Rothman says when making a purchase, be sure to pay attention to whether the total cost will fit within your budget, especially if you’re using an installment plan such as buy now, pay later. .
And be sure to compare to see if a particular retailer really offers the best deal, he said. Price trackers like Camel Camel Camel for Amazon can help you compare deals.
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