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Avoid holiday debt

While it's wonderful to be generous during the holiday season, make sure giving like Santa doesn't put you in the red.

"Recognizing you have a fixed amount of money available to spend is the first step towards a debt-free holiday season," says Andre Bolduc, trustee in bankruptcy and senior vice-president of BDO Canada Limited.

Make a list, check it twice
Plan for everything, advises Patricia White, executive director of Credit Counselling Canada. "If you haven't started your shopping then this is the time to establish your spending amounts and develop a list of all the things for the season."

Don't forget the decorations, cards, wrapping, shipping, postage, additional food and even extra travel expenses, she adds. "This way, you won't get caught short on things that are bound to come up."

And if you start early, you're more likely to make the best choices financially.

"As people move closer to the holiday season, they start to panic and when people start to panic a weird phenomenon takes over," says Laurie Campbell, CEO of Credit Canada Debt Solutions. "You tend to spend more because you don't comparison shop and because it's the last minute, you don't know what to get. You haven't really thought it out and so you think expensive will do the trick rather than thoughtful."

In addition, if you spread out the cost of the holidays, your credit card bill won't be as much of a shocker post-Christmas.

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However, if you finish your shopping early, don't keep spending.

"You have to be very specific and clear on what you plan to purchase and, when your list is done, walk away from the stores," adds Campbell.

Be wary of your payment method
If you opt for cash or debit, you'll have no choice but to stick to your desired spending amount, says White.

"Credit cards may lead you to impulse purchases that can take you beyond your planned amount. If you use a credit card, ensure that you can pay it in full when the statement comes in."

In fact, Campbell says their busiest season for their credit counselling service is January and February due to overspending during the holiday season. "Those people that were on the edge do tip over."

If you're planning on using credit, be sure to write everything down to keep yourself in check, suggests Campbell.

Get creative
This year, consider giving someone the gift of your time.

"Approach gift-giving during the holiday season in the spirit it was intended," says Bolduc. "Give to others yourself, not what you buy them at the local mall."

Consider gifts that are low on cost and high in thoughtfulness:

  • Make cookies for grandparents and others that will enjoy the special treat.
  • Plan to take a niece or nephew out for a special outing, such as a movie, rather than purchasing another gift they likely won't remember.
  • If you have heirlooms or collectibles, consider gifting them now to those who will appreciate the memento.
  • Prepare and freeze meals for new parents or busy families.

Vanessa Santilli is a freelance writer in Toronto.

-- Posted: December 9, 2013
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