Gift buying calls for strategy

By Deborah Adamson
Advertiser Staff Writer

Today is one of the biggest shopping days of the year, and you may be heading out to shop until you drop.

Kim Midgett of New Egypt, N.J., considers the popular My Little Pony Celebration Castle at the Toys "R" Us store in Lawrenceville, N.J. Impulse buying and out-of-control lists can have you paying for Christmas through 2004. Associated Press

But such goodheartedness, if unchecked, could lead to financial disaster.

"Pretty soon it's 40 people you're giving to," said Danny Alvarez, a financial advisor with Edward Jones in 'Aiea. "I don't think your family would want you to be in debt."

This year, credit card holders at First Hawaiian Bank are on track to increase their credit card purchases by a double-digit percentage compared with last year, said bank spokesman Gerry Keir.

On the merchant side, the bank expects to process $3 billion worth of credit card transactions from 7,000 merchants in Hawai'i, Guam and Saipan by the end of the year. That's up 16 percent from 2002, Keir said.

Most of the transactions come from Hawai'i, but the figure includes spending by tourists.

Credit card debt has been a leading cause of personal bankruptcies in the state, said Kristine Castagnaro, executive director of the Hawaii Council on Economic Education.

Many people don't know that "you'll pretty much never pay off your card if you just pay the minimum balance," she said.

The bottom line is if you can't afford it, don't buy it — and "affordable doesn't mean there's still room on your credit card," said Ron Wall, a family economics instructor at the University of Hawai'i at Manoa and author of "You and Your Money."

Here are ways to maintain your giving spirit for Christmas without landing in the poor house:

• Set a budget and stick to it.

Before you even leave the house, know how much you have to spend, said Karen Ho, financial educator at the Hawaii State Federal Credit Union.

Trouble comes if you're not mentally prepared to limit your spending, leaving you vulnerable to every sale at the mall. You'll be hit with a big credit card bill that could stay with you through 2004.

"You'll be paying for your Christmas presents all year,"' she said.

• Squash the urge to buy on impulse. If you wait a while, sometimes the urge vanishes.

You stop at Pearlridge Shopping Center to get your son a pair of shorts and spy a sparkly pair of Nine West pumps that are 30 percent off. Resist the temptation to buy it on the spot.

"Go to other stores first. If, at the last store, you still remember what you want, then go back and get it," Alvarez said.

• Use your debit card — or preferably cash — and leave your credit cards at home.

With credit cards, you'll be using money you don't necessarily have, Alvarez said. Debit cards limit you to your bank balance.

If you have your Christmas money in cash, leave your credit cards at home, Ho said.

"Some people with credit cards, they just can't stop themselves," she said.

• Skinny down your Christmas spending spree without putting a crimp in the holiday spirit.

"There are always gifts you can give that are not astronomical in price," Alvarez said. "It's the thought that counts."

Shop at discount places, such as the swap meet, the outlet mall or various craft fairs, Ho said.

Don't shop at the last minute so you'll get the best prices, she said. If you wait until Dec. 24, you won't have time to shop around for the best deal.

• Consider making your Christmas gifts.

Homemade gifts can be inexpensive and special.

You could make flavored vinegars — infused with basil, garlic and other aromatic ingredients — soaps, baby clothes, blankets and other gifts that benefit from your "special touch," Ho said.

If you're nowhere near as skilled as Martha Stewart, sign up for inexpensive craft classes.

If you're not the handicrafts type, consider giving coupons for babysitting, gardening or other types of personal service, Castagnaro said.

• Got a big group of friends? Find creative ways to give to each other without going broke.

Instead of buying presents for each of your two dozen gal pals, go out to lunch, Alvarez said. Or you could play Secret Santa: Each one draws a name to whom a present will be given.

• Recycle your gifts.

Not crazy about that purple turtleneck you got for your birthday that you've never worn? Maybe a friend will appreciate it for Christmas.

"We get so much stuff, you end up getting things you don't want," Ho said.

• Start saving for next year's Christmas shopping.

The Hawaii State Federal Credit Union has a "Green Bucks" savings account that lets you save for any goal for free. You can deposit any amount — money can be deducted from your paycheck — and there's no monthly fee.

If you set your Christmas budget at $600 next year, you have to save at a relatively painless $11.54 a week for a year.

State employees and retirees and their families in O'ahu can join the credit union. If you have a friend who's a state employee, you can open a joint account initially and your own account afterward.

Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.