Watching your holiday spending can save you grief later
By Mindy Fetterman
USA Today
This is the kind of advice your mother gives you, you never take, then you regret it later: Don't blow all your dough at Christmas.
If you haven't started holiday shopping, you only have nine days to go. And in the last-minute rush, you could be caught up in the frenzy and spend more than you meant to.
Worse, you'll charge it. That can land you deep in debt.
"We see people getting into credit card trouble over the holidays, then using their tax refunds to pay it off," says Dion Williams, CEO of Central Sunbelt Federal Credit Union in Laurel, Miss.
"We'd rather they saved their money, and used cash."
A lot of people procrastinate when it comes to holiday shopping. In fact, the biggest shopping days of the year, according to MasterCard's Spending Pulse holiday report, are virtually the last days of holiday shopping: Dec. 21 and 22.
The risk is high that shoppers will overspend as they race to grab stuff and get out of the mall fast.
"The pity of it is, most people who are shopping for Christmas '07 are still paying for Christmas '06," says Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling, a nonprofit counseling service. More than six in 10 Americans admit to feeling "blue" after the holidays, according to a survey of 1,000 adults by Coinstar, the money-counting service. And the main reason? Getting those credit card bills after the holidays.
There are some ways, though, to get a grip.
"Being a financial planner, I always think it's a good idea to have a plan," says Mark Bass, a planner with Pennington, Bass & Associates in Lubbock, Texas. That means a budget, he says.
You can do it the high-tech or the low-tech way.
"I personally get a little Excel spreadsheet going, and my wife and I go over every single person we're buying for — including adopting a family for charity — and we decide how much we want to spend," Williams says. "A lot of people don't even think about it; they just start buying, buying, buying."
Dan Houston, executive vice president of Principal Financial, uses a simpler method: envelopes stuffed with cash.
"My wife and I make a reasonable income, but to this day, we still use a budget, and 'X' amount of money goes into an envelope for each person," he says. "We don't use checks or credit cards."
Whichever method you chose, the key is to plan ahead. And try to avoid credit cards.
You should view shopping as "a reconnaissance mission," Cunningham says. Know what you're going to buy, then target that store and item specifically. Get in, get it, get out.
"If you aimlessly wander the aisles, you're going to buy more and spend more," Cunningham says.
If you're buying consumer electronics, specifically, it's a good idea to do some research first. Even if you're the type of shopper who likes to hold the digital camera and have the salesperson run through the spiel, it's smart to know at least something about the product and prices beforehand.
Web sites are trying to make research easier.
If you're shopping at the malls, "just sit down and have a Coke," Cunningham says. "Check what you've just done, and survey the damage."
Are you spending what you thought? More? Are you getting what you wanted? If you're laden down with packages, take everything out to the car and lock it in the trunk or cover it so thieves won't be able to see it. Remember: You could easily have your pocket or purse picked if you're distracted and carrying a lot of items, she says.
Holiday spending isn't just presents; it's wrapping and stamps and bottles of wine to take as gifts to parties, or the cost of throwing a party yourself.
And a final tip: Open a good, old-fashioned "Christmas Club" account at your bank. You'll get just a tiny interest rate, not much better than a regular savings account, but there's no minimum deposit, and it's a spot to stash some cash specifically for holiday spending. (Online banks tend to pay higher interest.)
Make a difference. Donate to The Advertiser Christmas Fund.
