How to control your holiday spending

Don’t let the holidays bust your budget. Here’s how to get through the season debt-free.
Dec. 7, 2009 | By: Alison Dunn

When it comes to holiday spending, Gail Vaz-Oxlade has heard all the horror stories.

“I worked with a couple who borrowed $1,000 from a pay advance store to do Christmas shopping, and two weeks later, owed $1,500 back,” says Vaz-Oxlade, a well-known financial expert and host of Til Debt Do Us Part. “They paid it back, but that immediately required that they borrow another $1,000. They spent $500 every two weeks in interest. They did that for seven months!”

When it was over, the family stood to lose their house and their car. “I cannot believe that spending $7,000 in interest was worth it,” she says. “These are the consequences we have to consider when we spend money we haven’t yet earned.”

Vaz-Oxlade hopes this story serves as a warning to others not to slide into debt over the holiday season. Instead of adding debt, try these tips to take control of your holiday spending now.

• Prioritize what’s important. Focus on the things that really matter over the holidays. Don’t simply give gifts because you think you “should,” or to show off to others. “What’s really important is the people you’re going to be with,” says Vaz-Oxlade. “It has less to do with the gifts you’re giving.” Deciding what kind of experience you want over the holidays will help you cut out those unnecessary gifts and expenses.
• Set a budget. Ideally, you should set your holiday budget in January and set aside a portion of that budget every month. But if you didn’t do that this year, you should still decide on an amount you will spend – and stick to it. And don’t let that budget put you into debt, either. Use money you have in savings, and if you don’t have it, don’t spend it.
• Get creative. Gifts don’t have to cost a lot of money to be special. Vaz-Oxlade recommends getting creative with gift-giving and look for ways to enrich others’ lives or help out. Offer babysitting services, make up a coupon book or bring together the family for a pot luck dinner instead of wasting money buying gifts people don’t want or need.

Don’t forget!

You’ve set your holiday budget and know exactly how much you can spend on each gift under the tree. But don’t forget your incidental holiday costs, says Vaz-Oxlade. If you don’t set a budget for those costs, you could still find yourself in debt come January. Your holiday budget should also include:

• Travel costs
• Postage and shipping
• Hostess gifts
• Decorating
• Greeting cards
• Entertaining
• Photos