The best way to avoid overspending on Christmas presents is to carry wads of cash. How’s that?
Psychologically, say debt counselors and personal finance advisers, it’s harder to part with the green stuff than to simply pass the plastic credit card.
Charging something — even paying with your debit card — is abstract. But there’s nothing like watching those $20 or $50 bills slip through your fingers.
“We have a tendency to overspend if we have a credit card,” says Yvonne Starks of Consumer Counseling Northwest in University Place, Wash. “But if you have cash, it’s really hard to give up cash.”
So organize your cash into little envelopes for each person you plan to buy for. Or clip each person’s gift money together with a paper clip and a note with their name. And when the allotted cash is gone, stop spending.
That way, you’ll spend less.
For most of us, Christmas means big spending, and for many big headaches in the year to come.
When Consolidated Credit Counseling Services surveyed 1,000 people nationwide at the end of 2006, 46 percent said they were still paying off debts from the previous Christmas.
Right after the holidays, when the bills come due, is when credit counselors, who devise and manage payment plans for debtors, see an uptick in business.
“December is usually a slow month for us,” says Anissa Schultz of Credit Advisors Foundation in Tacoma. “Everybody is out spending. January and February, when the statements come around, that’s when we are the busiest.”
It doesn’t have to be that way.
Mary Hunt, a 59-year-old California columnist and author of “Debt-Proof the Holidays,” published by DPL Press, learned how to trim holiday spending and every other kind of spending the hard way.
As a young married woman, she says, she “went completely crazy with credit cards. I was the quintessential American consumer.
“Christmas was one of my biggest downfalls. I could never recover from it.”
But in 1982, more than $100,000 in debt, she and her husband decided it had to stop.
“It took a real meltdown in my life,” she says. “I had no place to turn. There was no more credit.”
They spent 13 years digging their way out of debt.
“Even though we didn’t have a formal plan, we were smart enough to know that we needed to pay more than the minimum” on credit card debt, she says.
She started out working in commercial real estate. She earned more money by starting a newsletter called Cheapskate Monthly. It took off, and became her career. (It’s now renamed Debt-Proof Living, but the Web site is still called www.cheapskatemonthly.com.)
On her Web site, her holiday message is simple: Spend cash, put away the plastic, give more homemade gifts.
“The perfect gifts are consumable,” she says. “You eat it, shower with it, it’s gone. There is nothing to dust, store, hang or insure for the rest of your life.”
Repackaging food items such as candy or nuts that you buy in bulk can save money, she says.
“Go to Costco and buy bulk pistachios,” she suggests. “Get a big bag of Hershey’s kisses, buy some cellophane gift bags at Michaels and mix it up. Put a ribbon around it and a gift tag, and you’ve got 10 to 15 gifts.”
Hunt’s best tip for reining in holiday spending is this: “Stay away from the mall.”
All the decorations, Santa in his sleigh, the carolers and gift-wrappers will get to you.
“It’s emotional,” she says. “You’re going to weaken, and then feel guilty.” And if you don’t watch it, you’re going to overspend.
If you feel the urge to make a holiday visit to the mall, Hunt says, don’t go there to shop. Leave your credit cards at home, take only $5, and buy a cookie. Soak up the holiday ambiance. Then leave.
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