Did you overdo it last holiday season? I’m not talking about eggnog that was flowing a little too freely. I’m talking about cash that was doing the same.
A survey from Franklin Covey found that 61 percent of people say they always spend too much during the holidays. This year seems to be no different; early retail sales figures are already strong. That’s a problem, particularly as unemployment still borders 10 percent, and the percentage of people who aren’t earning what they should be is significantly higher.
So how do you keep from kicking off the New Year in a load of debt?
To start, you need to know what, exactly, your budget is. I’ve developed a handy calculator that can help you figure out what’s an appropriate amount to spend this season. You can find it on my website JeanChatzky.com, so go ahead and run your numbers now.
Once you have your magic figure here’s what I want you to do:
Make a list of the people you’re buying gifts for and how much you can spend on each person, using your overall budget as a guide. (The amount allocated for each gift should include shipping charges, taxes, etc.) This way, you won’t forget anyone, and you’ll be better able to fight off distractions, like the cashmere sweater your mom would love, but, sadly, you can’t afford.
Divide (or combine) and conquer. This weekend my daughter and her friend went to the mall to buy holiday gifts for their friends. On the way there, they were lamenting that neither of them wanted to spend all that much. By the time I picked them up, they’d decided to throw their money together, and as a result had enough left over for the movies that night. (I was so proud!) You can do the same. Buy a gift for a family, instead of each person in the family. Do Secret Santa, instead of presents for everyone. Or decide – as we did this year for Hanukkah – that in some cases you’re just buying gifts for the kids.
Use up your gift cards. If you’re like me, you might have a few gift cards you’ve accumulated over the last few birthdays or holidays. In fact, research shows the average American has $300 in unused gift cards lying around at any time. Consider it essentially free money to add to your budget, and no one will be the wiser.
Finally, if you’re using plastic – get something back. Card issuers have been ramping up the incentives lately, says Bill Hardekopf, CEO of LowCards.com and the author of “The Credit Card Guidebook.” This means you might be able to put an extra $50 or $100 in your pocket. For example, the Chase Freedom Visa gives you $100 if you spend $799 within the first three months that you have the card. The Discover More card gives you $100 for spending $500 within the first three months. If you think you can hit the mark with your holiday purchases and you need a new credit card (it’s not worth getting if you’re not in the market for one in general), that incentive will certainly help soften the blow.