12/ 04/ 2007
by Glenn Townes
Gorging doesn't apply only to eating during the holidays, it can also mean splurging at the local mall on gifts that you cannot afford. Overspending during the holiday season can lead to a stack of bills and start your New Year off mired in debt. Here are some helpful tips that will allow you to keep more cash in your wallet and avoid a broke and blue New Year:
Set a budget and stick to it
The best way to set a holiday spending budget is to make a list of gift recipients and to set a budget for how much you can afford to spend. Don't try to keep up with family or friends who may have the financial resources to give lavish and costly gifts.
It's also a good idea to buy gifts early, even throughout the year. Many shoppers start buying gifts for the following holiday season immediately after the current one. Prices also tend to be much lower at retail outlets after the holiday in order to liquidate holiday merchandise expeditiously. Simply put these early gifts in a box in the closet and, when the following December rolls around, you have a jumpstart on your holiday shopping.
Another cost-cutting tactic is to shop at thrift stores. Oftentimes, the thrift outlets will have merchandise that has never or rarely been used. The prices of items are also significantly lower at thrifts compared to the retail chains.
It's the thought that counts, not the price
It's important to give a meaningful, thoughtful gift and not necessarily an expensive one. For example, you may want to consider giving a non-retail gift. Consider making a donation to a relative's college fund or making a small donation to a charity in a friend's name. Also, baked seasonal treats are always welcomed gifts and are relatively inexpensive.
Leave the credit cards at home
Many financial planners strongly encourage shoppers to leave the plastic at home and shop with cash or a debit card. The tendency to overspend is heightened when you have a wallet chock-full of high-limit and high interest-bearing credit cards. A secured credit card or a prepaid one is another useful tool. Once the funds that you have already prepaid on the card are exhausted--that's it, and your shopping excursion is over. Unless, of course, you decide to put additional funds on the prepaid card.
Money management experts concede that if you must use a credit card for holiday shopping, be sure to utilize one with a low interest rate for an extended period. Some low-interest credit cards have only the nominal rate for a short period--a month or two--and then increase the rate to a higher amount.
Guilt-free shopping
It's OK that you don't buy everyone from the mailman to your boss a gift. Of course, it's wonderful to spread holiday cheer to friends and relatives--but only give what you can afford to. It's an effective strategy to stick to your financial goals without feeling guilty or worrying about giving a gift to everyone. Many financial planners agree that listing specific financial goals and objectives is one of the best ways to achieve financial independence and track your spending habits. Utilizing these suggestions will enable you to spread holiday cheer to all and keep your finances on track.
