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The nightmare before Christmas

'Tis the month before Christmas two thousand and two - And few budgets were safely set up for the new - Gift-giving ideas dancin

'Tis the month before Christmas two thousand and two - And few budgets were safely set up for the new - Gift-giving ideas dancin

November 15, 2002|by KEVIN CLAPP

kevinc@herald-mail.com

Two weeks.

Tick-tock; sales wait for no one.

Two weeks and we'll all be stuffed with turkey, basking in the glow of holiday warmth in a world dressed in red and green.

And the color of the day will be black. Two weeks. Black Friday. Hear those cash registers ring-ting-ting-a-ling.

But as shoppers embark on their annual gift-giving spree, hoarding away toys and clothes and books and music each wrapped in pretty bows and ribbons, a greedy little gnome lurks in corners, giggling at every flash of plastic.

Holiday debt, the nasty hangover from glad tidings of comfort and joy, can pile up faster than lumps of coal in a naughty child's stocking.

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Luckily, avoiding this gift that keeps on giving (thanks to interest charges) requires only a few trimmings and strategies to make the season bright, guilt-free.

"The holidays are a time when people tend to get into trouble with their budget," says Tracey A. Mills, senior manager for public relations with the American Banking Association. "People tend to spend more than they realize. There are a lot of temptations out there, a lot of impulse spending."

Like any other time of year, financial experts say budgeting for holiday expenses is crucial to prevent out-of-control spending.

Some shoppers save all year to have spending money for the holidays. Others may turn to homemade gifts and personalized items to keep costs down.

Regardless, entering the shopping season with a plan can prevent reckless purchasing that adds up.

"You set your budget and stick to it," says Lesa Feuillet, a certified investment advisor with Nathan and Lewis Securities in Hagerstown.

An American Banking Association 2001 Holiday Spending Survey asked 1,000 consumers about their holiday budget.

Of respondents, 13 percent reported being under their budget while 11 percent said they were over budget.

Nearly half, 42 percent, said they were right on target with their budget. But a third, 32 percent, said they had no budget for holiday purchases.

"For those with credit card debt, for those with a lot of financial responsibilities, there should be a lot of concern," Mills says. "Because there's not a lot of wiggle room in their regular household budget, so they're just adding debt onto debt."

Tom Tucker, a certified financial planner at Tucker Financial Services Inc. in Chambersburg, Pa., says it's easy to fall into credit card debt trying to flood presents under the Christmas tree.

Compounding matters are two-income families where both parents feel guilty for not spending enough time with their children.

They may view the holidays as a time to make amends.

"They feel guilty and try to make up for it by going into debt and buying things for their kids," Tucker says. "And it doesn't work, because the kids want the parents."

Tucker's clientele is older and has learned the credit lesson. And he shuns sharing spending strategies because, well, there should only be one rule, applicable year round.

"I just think it's common sense. You only put on something you can pay off when it's due," he says. "You're always going to have problems with debt if you're emotionally driven. I find people need to differentiate between what their needs are and their wants are, and a lot of people don't know the difference between need and want."

Keep in mind that needs are more than presents for under the tree, Mills says. Wrapping paper? That's a need. So are holiday cards, baking supplies, even eating out while shopping when you'd normally be staying home.

These hidden expenses add up. Mills says shoppers need to include these charges in their budget, then factor in an emergency cushion just in case.

"You're spending more on parking, eating, all the things associated with being away from home," she says. "They may look at all the gifts they're getting but not at all the little things they're getting for themselves, which cuts into their holiday budget."

So go ahead, make those spirits bright. Have fun shopping for friends and loved ones. Meticulously wrap those boxes. Use shiny ribbons and flowing bows.

Just remember that tiny tots with their eyes all aglow at their Christmas booty is no reason to overextend yourself financially for months to come.

"Let your budget be your guide and your plan be your guide," Mills says. "It's just like going grocery shopping hungry; you should never do that. ... You want to plan your Christmas budget before you hit the stores."

Make a budget and stick to it


Budgeting for the holidays can alleviate post-holiday stress as bills come due. Here are some tips to keep the bank account nice, not naughty, while preserving the fun of the season.

Review last year's tale of the (cash register) tape.

Enter the holidays reminded of what was spent last year. A quick review of past bills can frame spending and perhaps rein in past excesses.

Make a list. Check it twice.

Plan ahead, crafting a budget that takes into account gifts as well as hidden expenses such as meals out, gas, wrapping paper and cards.

Take a look at expenses two weeks before the holiday.

Before the last, mad dash for gifts, a quick review of what you've spent will let you know how much is left in the budget.

Establish a spending cap ...

Work with siblings, friends and parents to set a limit no one will spend more than.

... Or draw names

Instead of buying for everyone in the family, exchange names to ensure everyone receives a gift without the family bankrupting itself. Or buy only for children.

Sources: American Baking Association, American Savings Education Council

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