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Holidays

Tips for stretching your holiday budget

By Dani Arthur
BankRate Monitor

Nov. 20, 2001 - The holiday shopping season is kicking into gear. Are you ready?

Have you developed a budget? Know who's on your gift list? If you are like more than half of us, you haven't done any of the above. Only one person in six actually budgets for spending, according to Consolidated Credit Counseling Services.

It looks as if we won't be spending quite as much this year. While some Americans are paring back on shopping, that's not the story for all. Others turn to shopping to bring normalcy to life and to help soothe them in these uncertain times.

"Despite cutbacks and job layoffs, people may have the urge to be more extravagant, charging up their credit cards for gifts and entertaining to bring joy and a sense that life is going to be OK," says Howard Dvorkin, president of Consolidated Credit Counseling Services, a nonprofit organization that helps people solve money management and debt problems.

"We want to let people know that they can still have a happy holiday without overspending and potentially making their financial situation worse come January."

How about you? Are you that one in six who plans and saves for the holidays? Or do you fit in with the rest of us who just punt and end up paying off the holiday bills just as the fireflies are lighting the sky in the summer? Here are some tips to help you wrap up your holiday spending without overspending.

Track your spending

You've made a spending plan -- great! But if you don't keep track of all your purchases and make sure you're staying within your budget, you've wasted your time. Write down everything you spend on holiday clothing, cards, postage, wrapping paper and decorations, reminds the Consolidated Credit Counseling Services. "Don't forget that these holiday expenses add up and need to be tracked on your budget."

Shop with a list

Know what you want to buy, and go to the store with a list. You can zip through the stores faster and are more apt to avoid impulse buying, says Dvorkin. When you have finished shopping, stop.

Shop early

"The best window for holiday shopping is between Oct. 1 and Dec. 1," says Dvorkin. "Don't wait until the last minute. Give yourself time to compare prices and find the best deals." An all-out shopping spree leaves you exhausted from shopping, tempting you to buy the next thing you see regardless of cost. Last-minute shoppers are unlikely to save money.

Load up your wallet with cash

Leave your credit cards at home. "Spend cash. This will force you to budget and make overspending more obvious," says Dvorkin. According to the Consolidated Credit Counseling people spend up to a third more when paying with credit instead of cash. There is no emotional attachment to plastic like there is to cash.