How to shop for the holidays -- without wrecking your finances

It's the time of year when the world shops and shops.

Buoyed by the holiday spirit, many of us will be shopping here, there and everywhere, for gifts, decorations -- you name it.

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"This is a retail time of year," says Marc Eisenson, co-author of Invest in Yourself: Six Secrets to a Rich Life. "It's become part of the public mentality that you're supposed to show your love by shopping."

Credit card companies are doing everything they can to make sure we choose their cards for our holiday purchases.

Here come the goodies!
Issuers such as Discover, Chase Manhattan, and First USA are offering some big discounts for online shoppers through promotions with various online merchants including The Sharper Image, Gateway, Spiegel.com, TowerRecords.com, and Barnes & Noble.com.

Visa and MasterCard have pulled out all the stops on holiday promotions as well. Visa has a sweepstakes tied to the movie Dr. Seuss' How the Grinch Stole Christmas! Five hundred contestants will win back the total dollar amount purchased on their Visa cards from Nov. 1 to Dec. 31. With MasterCard's "Home for the Holidays" sweepstakes, one winner will receive $250,000, the cost of new home. Cardholders are entered in the sweepstakes each time they pay with a Visa or MasterCard.

American Express is offering double Membership Rewards points and waiving shipping and handling charges on online purchases of $50 or more when cardholders shop through its ShopAmex site.

Over at Citibank, the holiday promotions are geared toward the younger set. Each week, Citi Platinum Select cardholders have a chance to win a cool, new toy, including Lincoln Logs: The Collector's Edition and Elmo's Music Maker. Cardholders also have the chance to win a $3,000 grand prize shopping spree at SmarterKids.com, an online educational toy store. Cardholders enter these contests each time they pay with Citi Platinum Select cards.

Celebrate -- in moderation
If taking part in some of these holiday discounts and promotions will help you save some cash on gifts, by all means do.

Just don't go overboard. There's nothing cheery about starting the New Year with an enormous credit card bill.

Reining in Yuletide spending is especially important for people struggling to make ends meet.

"If you're having trouble, don't sink yourself further in debt," says Mike Kidwell, vice president of Myvesta.org, formerly Debt Counselors of America. "It just isn't worth it."

A $1,200 holiday tab charged on your credit card at 17 percent will take almost 20 years to pay off and cost $2,076 in interest, if you only make the required minimum payments, assuming a minimum payment of 1.5 percent.

"If you put $2,000 on a credit card, it's going to cost you a fortune in interest," Eisenson says. "And that's a fortune you can't use for other things."

Make a list -- and stick to it
A great way to keep holiday spending under control is to track it. It could be as simple as adding dollar amounts to a holiday gift list. That way you'll know the people you need to shop for, what you'd like to buy and how much it's likely to cost you.

"It's very important to track what you're spending because if you don't, you're setting yourself up to spend more than you have," Kidwell says.

Pay with cash or debit card whenever you can. When you do reach for credit cards, aim to pay off balances within three months.

Put big holiday purchases on your lowest rate credit card. Avoid using department store cards with high interest rates.

Be sure to pass on any of those "skip payment" promotions credit card companies like to roll out this time of year.

"It may sound like a nice gesture from the creditor, but you know what? They're still charging interest for it," Kidwell says.

As the holidays creep closer it's easy to feel overwhelmed. It's important to stay calm and stick to your holiday spending plan.

"The closer it gets, the more panicked you get. The more apt you are to buy anything," Eisenson says. "Stop. Take a deep breath. And think about what you're doing."

Small gifts with lots of meaning
Not all holiday gifts come from a mall. Home baked goodies make great gifts. How about having a low-key, come-as-you-are gathering with family and friends?

"Even taking the day off and watching a few good movies together. Anything your family could do together that does not involve this whole shopping frenzy," Eisenson says.

How about an outdoor adventure or a trip around town looking at holiday lights?

"More than just exchanging a wrapped item, do something fun," Kidwell says. "Go out and actually spend time together."