NerdWallet's Smart Money Podcast - Does Black Friday live up to the hype?

Episode Date: November 18, 2019

Black Friday might seem like the best time to get the biggest deals of the holiday shopping season. But is the shopping extravaganza all it’s made out to be? The answer: Sometimes. In this episode we give you the tips to get the best holiday shopping deals, including when and where to shop.

Hello, and welcome to NerdWallet's Smart Money Podcast, where we answer your money questions in 15 minutes or less. I'm your host, Sean Piles. This episode, I'm joined by a nerd for all things shopping related, Kelsey Sheehy. Hey, Kelsey. Hey, Sean. Happy to be here. I'm so happy to have you. If you would be so kind, can you please read this episode's question? Sure. This question comes from Mark in New Orleans, and he says, every year my family drags me along to go Black Friday shopping, and every year it seems to get more miserable, but my family swears by the deals. I'm wondering if Black Friday deals are

actually the best prices. Okay, Mark, my heart goes out to you. I personally have never been shopping on Black Friday, but years ago I worked retail on that day and I'm totally in your camp. The noise, the crowds, the mess the shoppers made in my meticulously folded sweaters, it's not my thing. I think I'm in the minority here. I actually like shopping on Black Friday. There's sort of an energy about it all. It's fun. And it's become a holiday tradition for some families. Now, to be fair, I've never stood in line all night for a Walmart doorbuster. That might change my opinion of Black Friday. Okay, fair enough. And maybe after I hear your Black Friday shopping tips,

I'll be a convert to your camp. So in this episode of NerdWallet's Smart Money Podcast, we're going to talk about whether Black Friday is the bargain it's made out to be and how you can find the best deals of the season. Also, a quick note before jumping in. You're currently listening to season two of the Smart Money Podcast, but we're already planning season three. And we want to hear from you. We have a survey on nerdwatt.com slash podcast, so please check that out and let us know what you think. Okay, let's get to it. Sounds good. All right, Kelsey, let's just cut to the chase here. Is Black Friday actually the best time

to find holiday deals? The short answer is yes, but there are a couple of caveats. First, don't buy something just because it's on sale. It's so easy to get caught up in the hype and think, oh my god, that Instapot's only $30. Sure, that's a great price if you need an Instapot. This is where a holiday shopping plan really comes in handy. Make a list, check it twice, and really try to stick to it. Second, some things are actually cheaper before or after Black Friday. You'll find deeper discounts on winter clothing, bedding, grills, and even toys at other points in the year. And I know that sorting out what is and is not a good deal on

Black Friday can be really tricky. So listeners, we did the work for you. There's a roundup of what to buy and skip on Black Friday on NerdWallet. You can find a link to that on our show notes post at nerdwallet.com slash podcast. But one thing I bet a lot of listeners are wondering about, how much can people actually save here? Like what's the dollar figure for what folks will save on those big ticket items? It's not an insignificant amount. We're seeing TVs, the fancy 4K ultra HD kind, marked down by as much as $800. That's a huge amount of money. It's huge. Now, things like laptops and gaming consoles and Dyson vacuums will also be marked down anywhere from $100 to $400.

And before you ask, who would want a vacuum for Christmas? I do, Sean. I do. Okay. To be honest, I actually really love vacuuming as well. And I will say that deal itself could get me into a store on Black Friday. But I want to dive deeper into that deal question. How can folks know whether the price they're seeing is actually a good deal or not? Well, from a purely price point perspective, it's never been easier to find out if you're getting a good deal. You can just download an app or a browser extension and easily track and compare prices and find coupons and even earn cash back. That really takes a lot of the legwork and second guessing out of finding deals and helps

you maximize your holiday shopping budget. Because let's be clear here, you should have a budget. Okay, that's a really good reminder. We all really need to have budgets, even though you might not want to make one, just do it. But I want to get back to the price comparing thing, because that's a classically millennial way to shop. Almost anytime I buy anything from a brick and mortar store, whether it's from the hardware store or a new pair of shoes, I check my phone while in store and just see if there's a better deal online. I've got a little pro tip for you here, Sean. There's an app for that. A few, actually. My go-to is Shop Savvy. I just scan the barcode of whatever I'm thinking of buying and

boom, the app shows me the prices at nearby stores and online retailers like Amazon. It's a game changer. So you're welcome. Oh, no way. That's super handy. Typically, I'm just Googling the name of whatever I want, and then I have to find the price of it, get the name matched up, but scanning the barcode sounds so much easier. So thank you for that. But one thing to note here is that you might be tempted to think that online prices are always better, but that's not always the case. And if you do find a better price online, though, know that a lot of stores will actually price match. The lesson here really

is to do your homework and to make an educated purchase so you can actually get that good deal. That's a really great point, Sean. Price comparison is such an underused tool, but it's a great way to score deals that sometimes are even better than what's advertised. But to me, a good deal isn't just about the price. Obviously, that's a key component, but a good deal is really only a good deal if it's something you need and, most importantly, something you can actually afford. Yeah, that's a really good reminder, and we'll touch more on holiday shopping debt in a little bit. But I think that about covers how to approach holiday deals, and I want to turn now to talking about shopping strategies. It seems like there's probably a spectrum of holiday shopping strategies,

from building a list well in advance to last-minute scrambling and just buying whatever is left on the shelf. Is there a strategy somewhere in between that can help Mark find the good deals, but maybe skip out on that Black Friday rush he's not too keen to be a part of? Well, you're right that there are a lot of different strategies. And so it's really about finding what works for you. Personally, I like to spread my holiday shopping out throughout the year and catch end of season deals and hit up other shopping holidays like Prime Day. I'll even pick up keepsakes on trips when I travel. But that doesn't work for everyone. For starters, you have to remember where you hit everything, but you also have to be extra diligent about tracking how much you've spent on gifts

throughout the year. Clearly, you are the model holiday shopper and a very thoughtful person because I think that many folks don't really have holiday shopping on their radar at all until November at the earliest. I know I definitely fall into that camp, which I'll say I'm pretty okay with, to be honest. I'm a big fan of blocking out one Sunday during the holiday season and just checking off everyone on my list in one go, typically from shops online. You know, that could be a good option for people like Mark, who want to score great deals but really loathe those Black Friday shopping crowds.

Personally, I say just stay at home, pour yourself a cup of coffee, lounge in your PJs, and shop from your preferred electronic device. You won't feel rushed or stressed out by the crush of other shoppers. And you may even find better deals than if you'd brave the crowds. Yeah, it seems like Cyber Monday might be more his thing. Definitely. But whatever your approach, there are a few tried and true tricks to keep you from going overboard. First, set that budget we've been talking about, and then make a list of all the people you need to shop for this year. Based on that budget, how much can you reasonably spend on each person? It doesn't have to be even Stevens, and it doesn't have to be expensive to be meaningful.

Right. NerdWallet's 2019 holiday shopping study found that on average, shoppers are planning to spend $825 on gifts this season. And to me, that seems like a lot of money for holiday gifts. And if you feel anxious just considering spending that much on presents, remind yourself that you don't actually need to spend that much, not even close to it. Just don't get caught up keeping up with the Joneses, really. And don't feel like you have to give everyone a gift either. Maybe don't exchange gifts with your book club or all of your second cousins this year. That's okay. And then once you know your budget, think about what you want to get for each person. I find I overspend when I don't put a lot of thought into the gift.

Now, on the flip side, I get so much joy out of finding the perfect gift for someone, and it often isn't very expensive. That's so true, because some of the best gifts that I've received or have given have often been the one-off finds from vintage shops or little personal things. Smaller items like that can feel so much more important and heartfelt than just another electronic device that folks might not really need. Exactly. And you know, now that you've got that budget and you have your shopping list, now it's time to start poking around for deals using the tips that we mentioned earlier. Check ad leaks and online sales and set price alerts so

that you'll know if something on your list goes on sale. And download those browser extensions we talked about. A couple good ones are Honey and Wikibuy. And you can use those to compare prices across multiple websites. Those extensions will also scour the web for coupons and automatically apply them to your purchase for you. Another important part of pinning down your shopping strategy is knowing how to stop yourself from overspending. And this can be really hard when you're going from store to store

and seeing deal after deal. And it's important to remember that these stores are really just well-designed traps full of flashing lights and big bright signs designed to suck up your money. And they make it really easy to get swept up in the moment and buy that trendy cooking gadget or that buy one, get one free item that you don't really need. So true. And we also really tend to flex our credit cards pretty hard during the holidays. That's fine if you can afford

to pay it off right away. I'm all about getting those credit card rewards. But NerdWallet's annual holiday shopping survey found that a whopping 35% of shoppers who used credit cards during the holiday season last year are still paying off that debt this year. And the longer you hold on to that debt, the more interest you'll pay, and that good deal you got quickly becomes a bad one. Here's a little math just to drive that point home. Say you put $600 worth of holiday gifts on your credit card this year. If you only make the minimum payment, it will take almost three and a half years to pay that off, and you'll tack on about $190 in interest charges. Yikes. Hearing that spelled out like that is pretty scary, especially because

in each of those three years, there are going to be other holidays and other expenses that pop up. And it's not hard to see how that can lead to a really tricky cycle of debt. But here's a quick tip that can help keep spending in check while you're shopping for a new toy for your nephew or a sweater for your mom. Keep a running tally in your phone's notes app or make a spreadsheet to track your spending. Just whatever works for you. Just make sure you're tracking it. And if your total is getting high, think about how much that gift would really be worth it to that person and whether it'd be worth it to you to still be paying off that gift a year or three later. Chances are that nephew won't miss one more toy and I bet your mom probably has plenty of sweaters.

And if you're susceptible to overspending, here's a tip for you. Leave your credit cards at home and only bring as much cash as you'll need to cover the item you're there to purchase. That will keep you focused and kind of forces you to avoid temptation and stick to your budget. Though it's worth noting that you don't even need to set foot into a store to get swept up. Online shopping has taken impulse shopping to a whole other level. It's hard to resist that onslaught of sale emails and social media ads. Personally, I try to leave my wallet in the other room, especially during the holidays. More often than not, the prospect of walking across my apartment is enough to break that impulse. I love that tip. And similar to that,

I make a point of never memorizing my credit or debit card number for the same reason. I just don't want the temptation. And with that, I think that about does it for shopping strategies. Now let's get to our takeaway tips. First, know that Black Friday often does live up to the hype, but not for everything. Know which items on your list will be discounted on Black Friday and which you should buy another time. Second, have a shopping strategy. Set a budget, make a shopping list, and really try to stick to it. Lastly, be really careful about holiday shopping so you don't run up a ton of debt. As we said, a lot of folks are still paying off last year's holiday debt, and that's never a fun position to be in. And here's one final tip for the overachievers.

If you want to get a jumpstart on next year, try taking on what's sometimes called the holiday savings challenge, where you start by saving $1 the first week of December, then $2 the next week, and $3 the following week, and so on for an entire year. If you do that, you'll have nearly $1,400 at the end and that will really cover your holiday shopping. And that is all we have for this episode. Do you have a money question of your own? Turn to the nerds and call us or text us your questions at 901-730-6373. That's 901-730-NERD. You can also email us at podcast at nerdwallet.com. Also visit nerdwallet.com slash podcast for more info on this episode. And remember to subscribe, rate, and review us wherever you're getting this podcast. And here's our brief disclaimer,

thoughtfully crafted by NerdWallet's legal team. Your questions are answered by knowledgeable and talented finance writers, but we are not financial or investment advisors. This nerdy info is provided for general education and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the nerds.