One holiday tradition
to break -- overspending
tempting to overspend during the holiday season. While the average consumer plans
to pay off holiday bills in three months, the true time frame is more like six
months, reports Myvesta, a financial crisis center in Rockville, Md.
do so many consumers fall short of their goals?
For starters, it's easy to get caught up in the material trappings of the
holiday season. It's a challenge to stay focused on such mundane things as a spending
budget, but it's essential. Without a self-imposed holiday budget, it's too easy
to spend freely.
While drawing up
a budget may sound Scrooge-ish, the exact opposite can be true. Thinking about
how you'd really like to celebrate the holiday can make the season more, not less,
are about expressing yourself and showing friendship. There are ways you can do
that, other than spend money," says Steve Rhode, co-founder of Myvesta.
Start planning a couple of months
before the holidays. If you wait until the last minute, you won't have time to
develop reasonably priced ideas or shop for deals.
list the friends and family members with whom you typically exchange gifts. Then,
decide if anyone can be cut. For instance, perhaps you can pick names within your
family or agree not to exchange gifts with some friends.
you've whittled your list, set a budget for each present, says Angie Zalewski,
co-author of "Cheap
Talk with Frugal Friends: Over 600 Tips, Tricks and Creative Ideas for Saving
a dollar value that you're going to shoot for," says Zalewski.
instance, you might decide that $25 will let you get your niece a nice sweater.
Keep that dollar figure in mind, but also look for sales that help you come in
under your target.
On the other
hand, don't take price checking to the extreme. While you should shop for major
purchases, running to every store in town can backfire if you keep buying. Shopping
online may make it easier to minimize impulse purchases.
ideas from the heart
Handmade gifts also
can stretch your budget. Granted, not everyone has the creative skills of Martha
Stewart, and handmade gifts may not be appropriate for everyone on your list.
Still, you can use your talents to lighten the strain on your wallet.
a basket of inexpensive items, nicely arranged. Or, combine homemade goods, like
chocolate chip cookies, with a purchased item, like a holiday platter, for an
appealing gift at a reasonable price. One caveat: Watch the prices of the ingredients
and supplies, or a budget-stretcher can become a budget-breaker.
family members or friends may appreciate your time more than an expensive gadget.
Rather than get a new coffee maker for your great-aunt, could you take her to
the movies or help her run errands?
reach for credit
If you are buying big-ticket
items, such as electronic equipment or furniture, watch for deals that aren't
as great as they sound.
stores offer "zero-percent financing" for 12 months or so. Here's the
catch: If you don't pay the entire bill by its due date, interest charges may
accrue from the date you made the purchase.
speaking, stores offer these deals because they'll make money on them," says
Howard Dvorkin, founder of Consolidated Credit Counseling Services, an organization
that helps consumers who are in financial crisis.
deal to avoid is any offer to skip a credit card payment over the holidays. You'll
end up paying much more in the long run.
Admittedly, it's next to impossible
to totally tune out all the marketing messages that bombard kids at this time
of year. However, you can mitigate their impact.
by minimizing exposure to media that can spur on a "greed-fest," says
Zalewski. Take catalogs to the recycling bin before you or your kids have a chance
to browse through them. Mute television commercials when they come on, so your
kids are less likely to become captive to their messages.
realistic when you tell your kids what you can afford, says Rhode. Most children
are resilient and can handle not getting everything they want. Ask them to identify
the items they really want and that are within your budget. If their holiday demands
are out of control, it may be time for a larger discussion on appreciation and
Your budget should also include the not-so-incidental
incidentals, such as entertainment, postage and travel costs. They all add up.
If you'll be traveling over
the holidays, start looking for bargains now. The Internet can help you track down
deals, says Rhode. One caution: If you're purchasing discount tickets that carry
penalties for changing your plans, it might pay to invest in trip insurance."
When it comes to holiday cards,
doing it yourself can pay off. Consider sending a letter on brightly colored paper.
If you have some budding artists around, ask them to design a card that you can
print or copy and send off. (First check prices for color copying, if that's necessary.
The charges can eat up any savings.)
you're more comfortable with store-bought cards, plan ahead for next year. Most
stores slash prices as the holidays get closer.
get-togethers also are part of the fun. Keep them going, but trim costs. Instead
of a fancy dinner, get together for desserts or brunch. Or, pop popcorn and watch
a holiday video. Also consider concerts and shows at local schools, houses of
worship and community centers.
Granted, staying with a budget isn't
easy. Even the best intentions can go by the wayside with the onslaught of ads,
catalogs and stores decked out with holiday presents and decorations.
boost your chances of success, take your budget to the mall or keep it by your
computer. Having a quick reminder of your goals can help you keep shopping under
control. When you're done shopping, go home or turn off the computer so you don't
succumb to impulse buys.
wisely at the holidays requires thinking about what's really important to you.
"Going overboard at the holidays is fine," says Ginita Wall, a CPA and
CFP in San Diego, and member of the advisory board of the Genworth Center for
remember the trade-off. The money might not be there for vacation next summer."