How Not to Go Broke on Holiday Gift Shopping

That holiday gift shopping turns otherwise sensible people into children with their money is no mystery. Consumers go over their holiday spending budgets by an average of 15 percent to 30 percent. SixWise.com explains why and what consumers can do to prevent it, including five tips for happy, sensible holiday gift spending.

(PRWEB) November 22, 2006 -- Spending is expected to increase some 7.5 percent this holiday season, an increase credit card group Visa USA attributes to rising employment and falling gasoline prices.

Typically, the holidays generate over one-fourth of annual U.S. retail sales. This year since Thanksgiving falls early, there's an extra shopping weekend before Christmas, and experts expect an extra boost in sales because of it.

I think a big catalyst for problems ends up with the holiday season

Culturally and combined with all the marketing, people throw caution to the wind and have less personal guilt about spending because it's not on themselves.

You have to look at where you'll be three months from now, six months from now, and a year from now. Otherwise your financial hangover will turn into a financial disaster that will stay with you for years to come

Our recommendation is to set a limit for a maximum amount you're going to spend, without regard for how many presents, who you're buying for and for what purpose

Then make a list for the people you need to shop for and allocate how you're going to spend your original budget.

Last-minute shoppers pay the price for their procrastination in several ways

They don't have the time to look for sales, be selective or price compare. Taking the time to do this can save as much as 20 percent on some purchases. Also, late shoppers tend to use premium delivery services such as next-day delivery as opposed to two to three-day delivery.

By developing and sticking with a holiday spending plan, Americans can enjoy the holiday season without suffering a financial hangover

How Not to go Broke on Holiday Shopping

Holiday Spending Sends Many Into Debt

Something about the holiday displays and the spreading of holiday cheer makes many Americans overspend.

"I think a big catalyst for problems ends up with the holiday season," said Brad Strohe, co-chief executive officer of Freedom Debt Relief, a consumer debt resolution service. "Culturally and combined with all the marketing, people throw caution to the wind and have less personal guilt about spending because it's not on themselves."

When all is said and done, consumers go over their holiday spending budgets by an average of 15 percent to 30 percent, according to the International Mass Retail Association.

With all of this extra spending, a 2004 holiday survey by The Consolidated Credit Counseling Services found that 39 percent of consumers were still paying off their holiday debt from the year before.

That holiday gift shopping turns otherwise sensible people into children with their money is no mystery. Consumers go over their holiday spending budgets by an average of 15 percent to 30 percent. SixWise.com (www.sixwise.com) shows why, and how consumers can prevent it, including five tips for happy, sensible holiday gift spending.

"You have to look at where you'll be three months from now, six months from now, and a year from now. Otherwise your financial hangover will turn into a financial disaster that will stay with you for years to come," says Karen Gross of the Coalition for Consumer Bankruptcy Debtor Education

How Much Should you Spend This Holiday Season?

There is no right or wrong amount for everyone, but what is important is figuring out how much you can afford to spend by making a budget.

A general rule of thumb to follow, according to CBS News Early Show Financial Advisor Ray Martin, is to only spend what you can afford to pay off before April 1. Anything that takes you longer than three months to pay off is out of your budget.

When setting a budget, first decide how much you can afford to spend (as opposed to basing it on how many gifts you have to buy).

"Our recommendation is to set a limit for a maximum amount you're going to spend, without regard for how many presents, who you're buying for and for what purpose," Strohe said. "Then make a list for the people you need to shop for and allocate how you're going to spend your original budget."

Keep that list with you when you shop to avoid impulse buys or spending too much on any one gift. And, says Martin, make sure you shop early to get the best deals.

"Last-minute shoppers pay the price for their procrastination in several ways," Martin says. "They don't have the time to look for sales, be selective or price compare. Taking the time to do this can save as much as 20 percent on some purchases. Also, late shoppers tend to use premium delivery services such as next-day delivery as opposed to two to three-day delivery."

Also, if shopping online, be sure to find out if there are deals on the items you are shopping for versus heading to a specific online store right away and buying it. This could save you hundreds of dollars. The store sales section of sites like HappyBirthdayGiftIdeas.com lists and routinely updates sales and deals available at a wide range of online merchants.

Tips for Happy Holiday Spending

Planning how to shop this holiday season is perhaps the best way to ensure your holidays won't be spoiled by a huge debt come January.

"By developing and sticking with a holiday spending plan, Americans can enjoy the holiday season without suffering a financial hangover," said Stephen Brobeck of the Consumer Federation of America (CFA). They offer the following tips to keep your spending in check during the holidays:

1) Make a budget and stick to it.

2) Make a price list of all gifts and other holiday expenses (food, decorations, greeting cards, party clothes, etc.) to make sure everything is included in your budget.

3) Compare prices before you buy and review sites and stores that specialize in quality presents at fixed prices, such as gifts under $30 (see http://www.happybirthdaygiftideas.com/gifts-for-under-30-dollars.html, for example), under $40, or other targeted price amounts you have set

4) Pay off credit card debts as soon as possible to avoid expensive interest charges.

5) Start a "Christmas Club Account" for next year. This allows you to automatically deposit funds each month into a bank account you'll use for your holiday spending next year.

NOTE: Republication of this and all SixWise.com articles is allowed as long as proper author credits and, if published online, live links are in place.

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