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Prevent a Post-Holiday Financial Hangover

The messages to spend, spend, spend are everywhere. Online stores promote sales that last only a few hours, the daily deals from every company I've ever contacted clog my email, and I get several pounds of catalogs every week.

However, there's still time to take control of your spending and prevent post-holiday financial headaches. Here's how:

1. Plan your gift-giving strategy.

Decide how much you want to spend on gifts. Make a list of everyone you plan to buy for, along with any gift ideas. Then, divide up the total dollar amount you have to spend by allocating the amount to spend on each person's gift.

Brainstorm possible gifts ideas for everyone on your list that can be purchased with the dollar amount allocated for that person. To reduce the amount spent consider family gifts (rather than individual gifts), gifts of time or service, or if appropriate, passing on family heirlooms as holiday gifts.

2. Decide how to pay. hand holding a stack of money

Charging holiday gifts means starting 2018 in debt. Instead of using your credit card pay cash if possible.  Unlike swiping a credit card, the “ouch” factor when we open up our wallets and hand over the hard cash keeps our spending in focus.

Some people use the “envelope system” for cash management. Put each person's name on an envelope and the amount allocated for their gift inside. When an envelope is empty, you are done buying for that person.

Alternatively, pay for gifts with a debit card instead of your credit card. This avoids interest charges and big bills in January because the amount spent is automatically deducted from your bank account. Keep track of debit card spending to avoid overdraft charges.

If you buy holiday gifts using your credit card, stick with just one card so it's easier to keep track of spending. Pick the card with the lowest interest rate and a grace period (if available).

3. Pre-shop before you buy.

A good rule of thumb is to compare prices with at least 3 sellers. You may save as much as 30%. Mobile apps and online shopping make this fast and easy. If buying an item you are unfamiliar with, find out the most important features to look for. Know the going price so can recognize a true sale. Just because an item is advertised in red letters doesn't mean it's a good deal, or even that it's on sale.

4. Shop with your list.

Stick with your plan. Only buy gifts for people on your list, and stay within planned spending limits.

Your name is not on the list so don't buy things for yourself when holiday shopping. If you see a great buy on that mini tablet you've been wanting, or a red cashmere sweater that would look terrific on you---leave it in the store and drop a hint to someone who has you on their gift list.

5. Check your receipts.

Double-check your receipt before leaving the store to be sure you were not overcharged. If you see a mistake, get it corrected immediately. 

Check the receipts for online purchases too. I recently bought something from an online store that offered free shipping on amounts over $50. My purchase exceeded $50 so I entered the required code and completed the purchase. However, the receipt showed I was charged for shipping. I called the company's 800 number to get the problem corrected.

6. Enjoy your holiday gift giving and wake-up to a debt-free 2018.

Posted on Monday, December 4, 2017 at 8:05 AM

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