smart spending

Put the brakes on holiday spending

It's 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, according to a report by Myvesta, a financial crisis center in Rockville, Md.

Why 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.

"The holidays 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.

Getting going

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.

First, 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.

Once 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 Money."

"Assign a dollar value that you're going to shoot for," says Zalewski.

For 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.

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Gift 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.

Try 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.

Some 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?

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