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PERSONAL FINANCE

For More Frugal Holidays

You can have a full holiday season without emptying your wallet

November 30, 2008|By EILEEN AMBROSE | EILEEN AMBROSE,eileen.ambrose@baltsun.com

The Big Three automakers need a bailout because we don't buy enough gas-guzzlers. The Wall Street Journal reports the government has less gas tax revenue to pay for bridges and roads because we've been driving less. Now we hear that retailers will go out of business if we don't shop till we drop this holiday season.

Enough. Consumers have done more than their fair share to keep the economy afloat for years. We have the debt to prove it. It's time to let others lift up the economy.

Or, as ethicist Bruce Weinstein says: It's OK to be a tightwad.

"It's not only OK in some circumstances, it would be wrong if we weren't," says Weinstein, who writes the Ask the Ethics Guy column for Businessweek.com. "Because you shouldn't spend what you don't have."

This is especially true during the holidays, a time when so many of us go overboard and figure we'll deal with the consequences later.

You have an ethical obligation to express gratitude to loved ones or those who have helped you, and many of us think of giving thanks this time of year, Weinstein says. But you don't have to buy gifts for all of those people to the point that you're putting your family's finances in jeopardy, he says.

And many do just that.

A recent Consumer Reports survey, for example, found that about 12 million Americans are still digging out from under last year's holiday debt.

"There is a lot of pressure to create the perfect holiday," says Latoya Peterson, communications specialist with the Center for a New American Dream in Takoma Park.

She says the economic crisis might cause some consumers to spend as much as last year, not less.

"They feel they need this kind of feeling of normalcy," she says. And that often means emulating TV commercials with people opening thousand-dollar presents, she says.

But with shrinking retirement accounts, record credit card debt, stagnant wages and rising unemployment, this is no time to splurge with money you don't have.

Conspicuous consumption is now out of fashion anyway. There's even a new term - "recessionista"- for the stylish dresser on a size 2 budget.

Besides, friends and family would feel guilty if they knew you were going into debt just to buy them lavish gifts, Weinstein says.

And gifts, while nice, aren't as important as you might think. Can you name every present you received last year?

"People don't remember. It doesn't mean we're ungrateful," says Mary Hunt, founder of the Debt-Proof Living Web site and author of Debt-Proof The Holidays. It's just that gifts usually don't create lasting memories the way spending time with loved ones does, she says.

Of course, there's a wrong and right way to be a tightwad.

The wrong way: "It's cheap, but not in the best sense. It's Ebenezer Scrooge before his epiphany," says Tod Marks, who writes Consumer Reports' Tightwad Tod blog.

It's also canceling all holiday festivities because suddenly money is short. "Your family will feel the loss twice," Peterson says. "What is OK is to recognize your circumstances," says Peter Post, director of the Emily Post Institute. "Look at what you can reasonably budget without getting yourself into debt. And then do the very best you can with that." Etiquette expert Post prefers the term "fiscally prudent" over "tightwad."

You can explain to friends and adult relatives that you're cutting back this year because of budget constraints.

Most will understand. Many will probably be happy to scale back the holidays with you.

Choose your words more carefully with small children. Don't tie the reason for a more modest holiday celebration this year to a lack of money, Hunt says.

"Don't let them be fearful of the future," Hunt says. Give them confidence that you have things under control, even if a parent has lost a job, she says.

Think of ways other than spending a lot of money to be generous or show your appreciation.

A heartfelt note of what a friend or relative means to you will be more memorable and valuable to the recipient than another gizmo or sweater that will soon be forgotten, Weinstein says.

"Give what you do best," Hunt suggests. "Give four hours of window washing if you're a fabulous window washer."

Or give your time, especially with children. "Children like time alone with an adult," Hunt says.

One Christmas gift Hunt suggests is wrapping 24 children's books, preferably with a holiday theme. They can be books you already own or borrowed.

Starting tomorrow and every night thereafter, let the child pick one of the wrapped books from the pile, and that's the book you read aloud.

Regifting has grown popular as a way to save money or to clear closets of unwanted gifts from others. If you choose to do this, use care.

Give items that are in excellent condition. And make sure you never recycle a gift among the same group of friends or family that it came from. You don't want to offend a friend by returning a gift she gave you.

Some people, though, welcome recycled gifts. "Some people have regifting parties if they are frugally inclined," Peterson says.

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