Nov. 29, 2002 -- Today is Black Friday, the day retailers move out of the red and into the black, and the day that many of the rest of us move into debt from all the holiday shopping we're doing.
But it doesn't have to be that way. Here is my holiday "Top 10" on how to save money during these 26 days between now and Christmas.
1. Debit Instead of Credit: Use debit instead of credit cards. A debit card automatically forces you to spend only what you have, and allows you to avoid paying interest. Leave the credit cards at home. Let's say that you go ahead and charge the $817 (that is the amount which the average American is planning on spending this holiday), and pay the minimum payment of $10 a month with an average annual percentage rate of 18 percent. It would take you 133 months to be rid of your debt. In that time, you will pay $840.83 in interest.
2. Know Your Budget: Know your budget, and make it non-negotiable: $10 means $10, not $12. Be sure to keep a running log of what you spend.
3. Don't Get Department Store Credit Cards: When you open up a new credit card, many retailers offer you a 10 or 15 percent savings on your first purchase. But that savings will quickly vanish if you don't pay off your credit card balance in full. Some retailers, like Marshall Fields, for instance, will hit their customers with annual percentage rates upward of 20 percent.
Mellody's Math: If you pay $100 for a blouse and take the 10 percent discount, you would pay $90. However, if you were unable to pay the balance by the due date, you would pay $18.90 in interest, assuming a 21 percent APR, which would completely wipe out your $10 savings. You are now paying $108.90 for the blouse that was originally priced at $100!
4. Make a List: Make a detailed list of who you want to buy for, how much you want to spend, and which gifts you expect to buy. This keeps you focused.
5. Pre-Shop: Do some research before you hit the stores. Call around and go online to find better deals. You should also try to consolidate to a few stores to cut down on transportation costs.
6. Stock Up On Stock. Instead of gifts, buy stock directly from a company, which allows you to avoid the fees and hassles of a broker or online service. For children, it could be the start of a wonderful tradition that instills a legacy of saving. Plus, it is a great, educational stocking stuffer, if your child knows the company.
For example, you can buy stock directly from Mattel, Inc (which was selling at $20.28 earlier this week) for your nephew instead of the hot toy that he's sure to forget. Or buy your father-in-law a share of stock directly from Home Depot (selling at $25.45 a share earlier this week) instead of a new power drill. Consider it a present for the future.
7. Pick a Card: Instead of giving an old-fashioned paper gift certificate, try a prepaid gift card, which works like a debit card. The money is loaded onto the card so that the person can get exactly what they want, but there a few things to watch out for. Sometimes the card company will charge the purchaser a fee. For instance, for a $25 gift card, some companies add an extra fee on top. If it's $5.95 for a $25 card, that means you have paid an interest rate of 23.8 percent.
8. Browse the Net: Instead of browsing the racks, try going online to shop. Many retailers offer discounts that are only available online, and they sweeten deal by offering free shipping and no-hassle returns.
9. Free Gift Wrap: If the store you are shopping in has a free gift-wrapping service, take advantage of it. You can save so much money by not buying fancy gift-wrap that you can put your savings toward other gifts.
10. Beware the Gift Receipt: Many stores offer gift receipts, which do not have a price on them, as a way for the gift recipient to bring the gift back, supposedly without knowing how much you spent. Don't go for it. Be bold and ask for an actual receipt with the real cost of the item on it, to make sure if someone's returning your gift, they get the full value, not just store credit or the price the day of return, which might be reduced. They're going to find out what gift cost anyway, so there's no need to hide behind gift receipt.
Mellody Hobson, president of Ariel Capital Management in Chicago, is GoodMorning America's personal finance expert. Click here to visit her Web site, ArielMutual Funds.com. Ariel associates Matthew Yale and Aimee Daley contributedto this report.