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A dose of holiday spending savvy

If you're like many gift-giving folks, you may not think about how much you're spending during the holiday fever until the January cold hits hard. By then, it's too late for gift- shopping wisdom and savings sense. 

Don't despair! If you're reading this article during the last of the holiday flurry, or tapping into it after the fact, we offer some useful tips to make your shopping financially sensible and stress-free, today or next year.

"The first thing is to get a jump-start on the shopping as soon as you can," says Laurie Campbell, executive director of nonprofit Credit Canada. "The closer you get to Christmas, the more (there's the) likelihood of spending more money. When you're rushed, you tend to buy a more expensive item than a thoughtful one," she says. So start early.

Campbell's second tip is to "be like Santa: make a list and stick to it." Take the list to the shops and use it as a spending diary. That way, you'll curb your spending, and when the post-holiday bills start arriving, you'll be able to track your expenses. 

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The other thing people tend to do when they get caught up in the season is to buy just one more item for that special person. Knowing when to stop is key. We tend to associate buying gifts with how we feel about people, says Campbell, but the important thing is to really find out what the holidays mean to you. "When you've checked off your gift list, go home, put your credit card away, put up your feet, have some hot chocolate, and enjoy the end of it," she says.

Financial therapist Amanda Mills says the biggest urge during the holiday rush comes from the heart. "People want to give with an open hand and from their whole heart, but that whole heart ends up being their whole wallet," she says. "So trying to draw the line between the two is very useful because whole-hearted giving doesn't have to leave you flat broke."

That means getting creative and finding ways to give from your whole heart without draining your finances. "A delicious gift of homemade treats, wrapped up in a beautiful ribbon, is a classy gift," says Mills. It's also an especially thoughtful gift in today's time-stressed lives. 

Drawing on personal experience, Toronto-based Mills says one thing that helped her slow down her holiday spending was taking into account the true cost of an item. For example, if you've already overextended your credit and you think you need to buy more stuff, factor in the cost of the interest that you'll end up paying when you can't pay off your credit card expenses for months. If the interest rate on your credit card is around 18 percent, add that to the price of your purchase over the year.

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-- Posted: Dec. 14, 2009
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