Don't get trapped by holiday debt


Summer is barely over. Halloween is still two weeks away.


If you haven't already started planning your holiday budget, however, you had better get to it. The gift-giving season is here, and without a plan, your spending can get out of control.

"Some families do put a spending cap (on holiday expenses)," said Bobbie Munroe, a certified financial planner and the owner of Fraser Financial in Atlanta. "But then they don't maintain it or plan for how to stay within that cap. That can be a real issue."

With long lists of gifts, family gatherings, school functions and a host of extra stress, it can be easy to lose track of spending. Though October is a little late to get started, experts say, it's better late than never.

SET A SPENDING CAP: Instead of setting a limit per person, set an overall holiday budget; say, $500, $1,000 or $2,000 total. That way, if you spend a little extra on one person, you spend a little less on others and prevent your budget from going bust.

Make sure the budget also includes holiday meals, travel, shipping and other expenses, Ms. Munroe said.

If you haven't started planning (the best time to start is in January), calculate your household expenses for November and December to see what you have left over for your holiday budget, said Nicki Arant, the director of education for Consumer Credit Counseling Services of Augusta Inc.

Ms. Arant also suggests working overtime or cutting flexible expenses (restaurants, movies, etc.) to boost your budget.

MAKE A LIST AND CHECK IT TWICE: Write down everyone you're going to buy for - children, parents, cousins, nieces, friends, co-workers.

Talk to relatives and friends ahead of time to make sure everyone is on the same page about who is buying what. Once you've made that list, don't keep adding to it. Just because your neighbor surprises you with a present doesn't mean you have to reciprocate.

"Don't feel like you have to do tit-for-tat all the time," Ms. Munroe said. "Send a very nice thank-you note."

In situations where someone makes more money - one sibling makes $150,000, the other $50,000 - talk it out ahead of time to ease any tensions. The family making less money might feel obligated to keep up with the Joneses, which can break a budget quickly, Ms. Munroe said.

"The elephant is in the room, why don't you just talk about it?" she said.

Consider drawing names, setting a spending cap or skipping presents altogether (which could be helpful if there are 30 nieces and nephews). You might not be the only one who would love to limit giving, for either the hassle or the cost.

"Don't be intimidated," Ms. Arant said. "I found ... (that) when I've said, 'Let's not do the whole family,' it's relief. Someone just has to be brave enough to make the suggestion."

SET THE MONEY ASIDE: However you choose to save - automatic deposits into a savings account or cash in the jar - make sure you don't mingle it with your regular funds. Get it out of your hands as soon as possible.

"Out of sight, out of mind," said Will Rogers, a senior financial adviser for Ameriprise Financial.

Better yet, put the actual cash into a jar, Ms. Munroe suggests. When you go shopping with a list, take out the amount you need and leave credit cards behind. When the cash is gone, that's it. No more spending.

Ms. Arant recommends tallying up the receipts at the end of the day so you know how much of your budget you spent.

Try to avoid credit.

"If you want to pay 20 percent extra for those Christmas gifts, use Visa," Mr. Rogers said.

If you must use a credit card, Ms. Arant said, stick to one - the one with the lowest interest rate - so you can keep track of your balance.

TRY NOT TO BUY WHEN YOU'RE TIRED OR STRESSED: Easier said than done, of course, but being tired or stressed can interfere with good judgment, so try to avoid peak shopping hours, such as weekends, when you can.

"Avoid last-minute shopping," Ms. Arant said. "That's when you're going to be dealing with stress ... and that's when you're going to have uncontrolled spending."

Don't go hungry, either; that can make you cranky, which won't help your stress level.

DON'T GIVE GIFTS BECAUSE YOU HAVE TO: You might feel guilty about not spending enough time with your grandchildren or you want to impress your friends, so to make up for it, you buy them lots of gifts.

"You're totally missing the point if you're giving gifts of obligation," Mr. Rogers said.

One year, he said, his extended family all sent each other holiday gifts, but his children still haven't played with some of the toys.

The lesson? Don't buy just to buy. Make sure you're giving out of love and generosity. It sounds trite, but it will save you money, too.

FAIR ISN'T ALWAYS EQUAL: Just because you spent $50 on one nephew doesn't mean you have to spend $50 on the other.

If both gifts are thoughtful and meaningful, it doesn't matter that one cost less, Mr. Rogers said.

"Different people have different needs and appreciate different things," he said. "It should just be something that inspires them."

CONSIDER UNCONVENTIONAL GIFTS: "I would still give an arm and a leg for my Aunt Julia's divinity fudge," Ms. Munroe said in an e-mail.

Giving a good gift doesn't mean buying something pricey. If you have a particular talent, such as making fudge, consider putting that to work, especially on a tight budget.

If your sister can't organize her hundreds of photos, make a scrapbook. But make sure you budget for it, because even homemade goods cost a little money.

Mr. Rogers pointed out that time together - such as Grandma planning a day at the movies or the zoo - can be just as valuable.

And don't forget about plays, tree-lightings and other events that are free but can be good fun for family or friends to share.

CONSIDER THE OPTIONS: If you know people who are struggling to make ends meet, consider not giving gifts at all, or just ask them to bake cookies for you so they don't feel more financial pressure.

If, for example, your adult children are hurting financially, a more useful gift than a new CD or sweater might be to instead help them with some of their debt, Mr. Rogers said.

CONSIDER HELPING THOSE IN NEED: Everyone has friends or relatives who have everything. They buy what they want, when they want it, and it seems it's impossible to find them a gift.

Consider making a donation to a charity in their name.

If you have someone you feel you really must buy for, out of obligation, donate to charity instead, Mr. Rogers said. Then, everyone wins.

KEEP TRACK OF WHAT YOU BUY: Maintain a list of who you're buying for, and write down what you bought them when you buy it.

That way, you might prevent your spouse from also buying that same person a gift, Mr. Rogers said. You can make sure you don't buy your mother the same thing your sister did.

START PLANNING FOR NEXT YEAR: The best time to start planning for next holiday season is January. If you didn't do it this year, do the planning and budgeting after the New Year.

Ms. Arant suggests setting aside money a year ahead of time so you don't need to use charge cards the following year. Plan to pay off debts within 90 days of the holidays.

If you do that, you also can take advantage of post-holiday and summer sales on everything from discounted wrapping paper to clothes. If you give yourself enough time, you can order things online to save money.


For many gift givers, the ability to practice a bit of spending restraint during the holiday shopping period doesn't come easily. Several sites on the Web, however, offer a host of tips to help consumers cope with the budget pressures created during the giving season.

Here are a few worth a visit:

- Features 18 suggestions for saving on holiday gifts.

- Christmas Celebrations Contains useful holiday shopping basics and how to work within a budget.

- Federal Trade Commission Offers quick tips and feature articles about holiday shopping.

- The Financial Planning Association Provides several measures that can help keep spending in check.

- The Home Improvement Web Focuses on various budgeting topics, including sticking to a holiday budget.

Source: McClatchy Newspapers