Lady LUX

Don't go into debt

Coinstar conducted a survey that shows that there's no doubt that people are getting in over their heads during the holiday season. According to the survey, 62% of consumers who set a holiday budget expect to go over their limit by an average of $140.

The survey also showed that people are making sacrifices. In order to buy gifts for everyone on their list, 66% of shoppers are willing to cut back on things they enjoy like dining out and entertainment, or are even willing to take on debt through credit cards or purchasing an item on layaway.

And credit card use grows. Gifters are nearly 20% more likely to use credit cards instead of cash or gift cards to pay for their holiday gifts this year (49% in 2015 vs. 41% in 2014), according to Coinstar.

Don't become one of these statistics. Plan in advance.

Benjamin K. Glaser, features editor with DealNews, said, “The most important thing shoppers can do to prepare for holiday shopping is research and budget. Start with how much money you can allot for holiday gifts (without dipping into important long-term savings), and then determine what items you want at what price points, and where they will be available at those prices. Then, have a back up plan for each item, as the best deals will surely sell out quickly. When the day comes, stick to your list to resist impulse purchases.”

Consumer finance expert Kevin Gallegos, vice president of Phoenix operations for Freedom Financial Network, shared his best tips:

Create a realistic holiday-specific budget. Not using a holiday budget (no matter how large or small it is) is the number one way to overspend.

Calculate how much you can spend. Compare your total to a list of everything you anticipate spending on this holiday season. Depending on your individual situation, you may need to include:

• Everyone you'll give a gift to and how much you plan to spend.
• Cards and postage (which could be zero if you send cards online or by email).
• Decorations.
• Entertaining, including food, drink, special garments, child care, etc.
• Year-end tips for newspaper carriers, babysitters, housecleaners, doormen, hairdressers and other service providers.
• Gifts for teachers, doctors, neighbors or others close to you.
• Travel costs.

If the total is too much, reality says you must cut back. Start by trimming 5-10% from each category.

Prepare for fewer “deals” this year. Some experts predict that retailers – especially high-end ones – are less likely to offer the massive discounts that have lured shoppers in recent years. Shoppers will need to plan more and stick to their budgets.

Shop as soon as the budget is in hand. Keep a copy of your list with you so that when you see the right gift at the right price, you can purchase it. At home, designate a closet, empty chest of drawers or laundry basket as a holiday gift repository. Tape your list to the top, and check off gifts as you purchase them.

Give of yourself. The gift of time truly does mean the most. Help a neighbor get his/her house or lawn ready for winter; make a plan to shovel snow for an elderly neighbor or family member; offer babysitting services during the holiday season.

Map out what stores (brick-and-mortar or online) to visit in what order, and what to shop for at each location. If you are splitting up shopping with family members, detail who will shop for what and where.

Shop with cash or a debit card. Several studies have found that people spend 15-20 percent more on purchases paid with a credit card. People tend to hold on to large bills longer than small bills, so start out with a $50 bill instead of ones, fives, and tens. You can assure sticking to the budget by putting the budgeted amount of cash for each intended recipient into your wallet before heading to the store.

Send electronic cards. Low-cost and free versions are available.

Plan your tips. Remember that some people, such as teachers, mail carriers, delivery personnel, doctors and coaches, are not allowed to receive cash gifts. Baked goods, a gift bag of personal care items, or a “movie night” gift package with popcorn and a DVD rental gift card can be good ideas, as would be a small gift certificate to a local restaurant where the recipient can take a lunch break.

Follow these tips and you'll have a less stressful holiday season than in year's past.

Tagged in: money, finances, holiday spending,

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