Posted on: Sunday, December 9, 2007
Don't put yourself in a holiday ho-ho-hole
By Mary Hance
Gannett News Service
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Gannett News Service photo
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Christmas is just days away.
So get ready, and this year don't overspend, for a change.
In a 2006 Consumer Reports survey, 23 percent of people admitted they would be paying off holiday-incurred debt until at least March. And then comes research from the Federal Reserve showing that 40 percent of U.S. families spend more than they earn — not including Christmas spending.
Add to that the fact that the median amount of credit card debt carried by the typical American is about $6,600. That is not very jolly news at all.
But it doesn't have to be that way. You don't have to be saddled with oppressive debt in the name of Christmas; you don't have to have a Christmas that you can't afford or work two or three jobs to pay for more stuff.
This year, resolve to celebrate the holidays in all kinds of special ways with family and friends without going into debt or adding to the debt that you are already fighting.
The first step is to establish your budget for the holidays. That doesn't mean some arbitrary number that you pull out of the air, but an amount that you calculate based on realistic expectations, such as what you spent last year, and what you know you will need for entertaining as well as gift-giving this season.
You have heard "Make a list" a million times, but it really is crucial. The best plan is to write down all of the people you think you need to buy for and evaluate each one. Ask yourself, are there people who do not need to be on the list? Are there people who you could make something for, or who you could agree to spend time with instead of exchanging presents? Then try to write down an amount you plan to spend and a few ideas of things they might like.
If you are cutting friends or relatives from your age-old gift exchange list, talk to them as soon as you can about changing traditions. Tell them you want to stop exchanging gifts and go to lunch or dinner or some event that you would all enjoy together instead.
Do not, under any circumstances, take on new debt for Christmas. The best way to accomplish this, and it is not easy, is to make your list fit the budget, not the other way around.
" 'It's Christmas' is not a good reason to put yourself in debt," says Bill Hardekopf of www.lowcards.com. "Debt can quickly tarnish the memory of a holiday season."
Use cash instead of credit cards when shopping. According to Dun & Bradstreet, people spend 12 percent to 18 percent more when using credit cards.
Find ways to cut back on daily spending (like taking home lunch to work, eating at home instead of out, not buying stuff for yourself) to save more cash for your holiday spending.
Consider giving services like baby-sitting, running errands or cooking monthly meals as gifts to some people on your list. You can make up a coupon detailing the services you are giving.
If you want to entertain, hold a holiday potluck. Or consider having everyone bring toys for a toy drive or food for a food drive instead of holiday gifts.
Stock up when things are cheapest. For example, buy a ham or turkey when they are at the super-low promotional prices and put an extra one or two in the freezer for later. And, of course, buy gift bags, paper, cards and decorations after the holidays when they are as much as 70 percent to 90 percent off.
Take advantage of all of the fun free things there are to do during the holidays, like looking at Christmas lights. (In Hawai'i, there's the free City Lights display and Christmas tree and wreath displays at Honolulu Hale.)
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