Regret-free holiday spending



It's early November, but it's not too soon to make sure your holiday spending won't get out of control.

To avoid going overboard, you will need to plan your purchases so that you won't get carried away with holiday spirit once you hit the stores.

More than three-quarters of adults recently surveyed by Consumer Reports said they intended to cut back on holiday spending, often by buying fewer gifts. So you'll have plenty of company.

And if you start to waver, remember: Your friends and family won't want you to go into hock for the holidays, at least if they care about you. Plus, if you're upfront about being frugal, that gives them permission to do the same.

Here are tips to prevent overspending:

Create a budget

The word "budget" has been such a turnoff to consumers that financial advisers replaced it with the more pleasant-sounding "spending plan." But in these tough economic times, "budget" is now in vogue.

To budget, draw up a list of everyone you want to buy a gift for and the amount you can afford for each one. Then stick to it. Also, write down a potential gift for each person on your list, making sure you have backup ideas in case your first choice isn't available, says Mandy Walker, senior project editor with Consumer Reports.

"Otherwise, you will end up panic purchasing. And panic purchasing is the best friend of buyer's remorse," she says.

If money is tight, consider the gift of time, such as an offer to baby sit children for parents who need a night out, says Trish Lynch, a corporate trainer with credit counselor Clearpoint Financial Solutions.

Gifts that save money

Consider gifts that will keep costs down for the recipients, says Erin Huffstetler, who writes the Frugal Living blog.

These include gas cards, a gift card at a favorite store, energy-efficient light bulbs, reusable shopping bags, battery chargers, reusable water bottles and a subscription to a financial magazine, she says.

"Newspaper subscriptions. People are getting big into couponing again," Huffstetler says.

The frugal guide says she expects to spend less than $100 on food and gifts during the holidays for her family of four and 20 others.

Comparison shop

Before spending a dime, browse online to find out which retailers have the best price.

Shop early if you need to get a particular model or color because the item might go quickly, Walker says. But if your friends and family aren't so picky, you can get the best deals by waiting because retailers are expected to lower their prices as the holidays near.

If you shop online, look for coupons and free shipping, which many retailers will be offering.

If you shop at a mall, take frequent breaks to assess the damage. "Every other hour, pull out the receipts and see where you are. Have you overspent?" says Gail Cunningham, a spokeswoman with the National Foundation for Credit Counseling. If so, you'll have to cut back somewhere else.

Avoid shopping at peak times at malls, Lynch says. If you shop when stores are packed, you will be less likely to comparison-shop because you'll be eager to escape the crowds, she says.

Pay with cash

One of the scariest findings in the Consumer Reports survey is that about 12 million people are still paying off debt from last year's holidays.

Avoid this holiday hangover by paying with cash instead of credit cards so you can't spend more than you have. (Even debit cards that pull money directly out of your account can be costly if you get slapped with a hefty fee for going over your limit.)

Plan ahead for next year

After the holidays, add up the amount you spent on gifts, food, travel and other holiday expenses. Then divide that number by 10, Cunningham says. The answer will tell you how much you should save each month next year to have enough cash on hand a year from now for the holidays, she says.

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