- The Washington Times - Tuesday, December 10, 2002

"Jane" is a George Washington University graduate student with an empty wallet and a long holiday shopping list. She plans to buy Christmas presents for family members and a few close friends, as well as pick up some gifts for charity. She estimates the shopping spree, which will get under way when she completes her final exams next week, will set her back $500.
The trouble is, that is $500 Jane doesn't have.
"If I want to buy something this year, I'll have to put it on a credit card. I have no choice but to go into debt," said Jane, who is 24 and asks that her real name not be used.
Jane already is carrying a balance on five of her eight credit cards. When the holiday bills start rolling in next month, she says, she probably will delay payment by transferring the balance to a card with a lower interest rate.
Credit counselors worry the shopping malls and Internet this month are full of people like Jane. Despite the slumping economy, retail spending has been stronger than expected, a sign consumers are paying for their purchases with plastic.
"My guess is that the amount of plastic being used this year is substantial," said Howard Dvorkin, president of Consolidated Credit Counseling Services Inc., a Fort Lauderdale, Fla.-based company that helps consumers get out of debt.
Wal-Mart Stores Inc., the world's largest retailer, hit a single-day company sales record on the day after Thanksgiving, taking in $1.43 billion nationally.
The company said yesterday that sales tapered off the next week, although some top retailers said revenue remained strong, Reuters reported.
J.C. Penney Co. Inc., which operates its namesake department stores and the Eckerd drugstore chain, said December sales at stores open at least a year are running ahead of expectations.
Consumers were spending even though Labor Department data released last week showed the unemployment rate had soared to 6 percent in November.
The jobless rate matched April's, the highest since it hit 6.1 percent in July 1994.
Shoppers don't plan to go into debt during the holidays, Mr. Dvorkin said.
A Consolidated Credit poll of 850 consumers nationwide found that 55 percent said they planned to spend less this year than they did in 2001.
Fifty-seven percent said they still were paying off holiday debt from last season.
Most of these respondents said they would not make the same mistake again and vowed to pay off purchases within three months.
The International Mass Retail Association, a trade group for "big box" retailers such as Wal-Mart and Target, said consumers tend to spend between 15 percent and 30 percent more than their initial estimates.
Last year, shoppers spent 31 percent more than they had planned, the association said.
"I think everybody has good intentions going into the holidays. Where people go wrong is they go into a store to buy a shirt for Uncle Benny, and they hear the jingle-bell music and they see a reindeer walk by, and they think, Uncle Benny is a good guy, maybe I'll get him this tie and these socks, too," Mr. Dvorkin said.
The best way to avoid holiday debt is to set a spending budget and stick to it, said Steve Rhode, president and co-founder of MyVesta.org Inc., a credit-counseling center in Rockville.
"Stick to the Santa principle: Make a list and check it twice," Mr. Rhode said.
He also recommends clients shop online to avoid the seductive department store trappings.
If shoppers do use credit cards, Mr. Rhode said, they should record their purchases in their checkbook ledgers.
"That way, when the bill comes, you can pay for it in full," he said.
Mr. Dvorkin recommends consumers avoid credit cards at all costs.
"I don't think it's a good idea to purchase something unless you can pay for it then and there," he said.

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