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Holiday, Yes, Holiday Budget Helps Rein in Spending

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By David Burge

RISMEDIA, Sept. 15, 2008-(MCT)-Football season just started and the leaves haven’t begun to change color yet, but now might be the right time to start thinking about Christmas, experts say.

A little planning can help you avoid financial distress this holiday season and keep you from piling up more debt, experts say. If you want to pay cash this holiday season, you still have 3 months left to create your own Christmas savings fund.

“Waiting until December to start thinking about holiday spending is a recipe for piling on debt that hangs around well into the New Year,” said Greg McBride, senior financial analyst with Bankrate.com.

Anthony, N.M., resident Roberto Chacon, owner of Bear Spot Video Productions, said he hasn’t started saving for Christmas yet, but plans to start putting money aside in mid-October. He also plans to earn extra money for the holidays through some side jobs as a cameraman.

“I try to pay for everything in cash,” Chacon said. “I don’t like to use credit cards for anything.”

Budget first

Start by setting a holiday budget, experts say. Review last year’s expenditures and make sure you include more than just what you plan to spend on gifts, McBride said. Your holiday budget should also include holiday meals, travel, office parties and any baking you plan to do, he added.

Dig out your credit-card statements and checkbook register to get a better idea of what you actually spent last year, said El Paso certified public accountant Diane Smith, a partner with accounting firm Stockton, Scurry & Smith. This can be a good starting point for your holiday planning, Smith said.

Form strategy

Maureen Hankins, director of the El Paso YWCA’s Consumer Credit Counseling Service, suggests having a family meeting so everyone can get involved in strategizing on how to move from overspending at Christmas to a “new way of doing things.”

If you have a large family, you can draw names and give gifts to those you draw instead of buying presents for everyone, Hankins suggested. Another option is to agree that the children will get one big gift and two smaller ones as a way to help curtail spending, she said.

Get everyone to agree to a plan that’s designed to limit excessive holiday spending, Hankins said.

Get the entire family to agree that you want to have a “good Christmas but not at the expense of next summer’s vacation or other things,” Hankins said.

“Sticking to a plan can be a source of pride,” she said. “Christmas is a really emotional time and people buy impulsively. With a plan and if everyone knows what you’re trying to do, you have a checkpoint.”

Sooner is better

Mike Sullivan, director of education at Take Charge America, a nonprofit debt-management and credit-counseling firm in Phoenix, said January and February, when the Christmas bills come due, are “our busiest months.

“That’s when more people have credit-card trouble than at any other time of the year,” Sullivan said.

The ideal time to plan for Christmas is Dec. 26, Sullivan said. You can take advantage of post-holiday sales and you can make a gift list for the following year while the holiday is still fresh in your mind, he said.

But if you haven’t begun to plan for this year’s holiday season, don’t despair, Sullivan said.

“It’s better now than in November,” he said.

Don’t charge

Vow to pay cash for your gifts and other holiday expenses this year, Sullivan said.

“If you don’t charge, it’s virtually impossible to spend more than you can afford,” he said. “For most people, Christmas is about guilt. They spend more than they should because if they don’t, they feel guilty.”

Start shopping now, Sullivan said. When you see a sale and you have the cash, that’s a good time to start buying gifts, he said.

Once you get an idea of how much the holidays will cost, set aside money from each paycheck, preferably into a high-yielding money market or savings account, McBride said.

Think priorities

Prioritize and think about your long-term finances when you do your holiday shopping this year, he added.

“Don’t jeopardize your financial future by trying to keep up with the Joneses,” McBride said. “Don’t be bashful about reining in your holiday plans because of the economy. You won’t be the only one.”

Smith suggests spreading out your shopping over the course of several months instead of doing it all in December. This can help you handle the financial strain of Christmas more easily, she said.

Consider buying U.S. Savings Bonds for children on your gift list, Smith said. These are gifts that can teach young people about savings and can be purchased at the last minute, she said.

Where to get help

–www.bankrate.com. The site has free search engines to help you find top-yielding savings and money market accounts, plus free articles and advice to help you manage your money better year-round.
–www.takechargeamerica.org. The site has free articles and tools to help you manage your finances and credit better. You can also ask Education Director Mike Sullivan a question through the Budget Doctor feature and typically get a response within 72 hours.
–www.valueyourmoney.org. This site contains free information on a variety of topics including budgeting advice, the do’s and don’ts of credit cards, post-holiday debt and more.

Copyright © 2008, El Paso Times, Texas
Distributed by McClatchy-Tribune Information Services.

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