Avoid Holiday Spending Hangover

The holiday season is upon us. I see Santa figurines and miniature snow villages in the stores. Pull out your credit cards. It is open season for holiday spending.

Wait! Let’s not rush things. Take a moment to imagine how contented you would feel if you didn’t get a “Holiday Spending Hangover” this coming January. Sounds good? Okay then, let’s do a little prep work.

Review What You Bought Last Year

Dig out your credit card bills from November and December 2010 and January 2011. If you didn’t keep them, go online and print copies. Mark them up. Make notes of what you bought for whom. If you cannot remember, then just circle the ones you think were for holiday spending. Now, identify your non-gift holiday spending. That would include holiday cards, giftwrap, decorations, hostess gifts and hosting your own get-togethers.

Grab your check register for the same months. Repeat the circling and notation thing.

Add up last year’s holiday spending. No, you cannot skip this step and just guess. Of my clients who guess, ninety-nine percent end up with estimates that are half of their true spending.

When you get the true total, write it down. We are going to aim for a lower number this year.

Make a List and Check It Twice

Now make a list of everyone for whom you’ll buy gifts this year. Make another list for the same kind of non-gift holiday spending that you identified for last year.

Now go down the list and put dollars next to each item. If you are comfortable with a spreadsheet, use that for convenience. Total the dollars. Not below last year’s total? Trim the dollars here and there. Keep working on this until your spending plans are comfortably below last year’s numbers.

Oh, I need to tell you one of the rules. Your total has to be a number that allows you to pay for all of this with cash or an amount on a credit card that you can pay in full when the bill comes due.

Now you are ready to start brainstorming what you will give as gifts. Have something in mind for everyone. If you are an overachiever, have a backup plan for everyone. Sometimes you just cannot locate your first choice for Aunt Molly, like that desktop electric fan she longed for during those horridly hot August days.

Be creative and be smart. Do some window-shopping first. Last week I saw a new copy of a great cookbook at Half Price Books for $9.99. I know I paid $30 for it three years ago. I might go back for that book for a relative. Barnes & Noble sends me discount coupons. I have a friend who loves those colorful little Moleskine notebooks near the register. I’ll wait for those coupons and then stop in for the notebooks.

Promise Not to Use Credit Cards This Year

Do your shopping with cash, checks or debit cards. If you are shopping online, you are going to have to use your credit card. But watch your spending budget.

When you use your credit card, write the dollar amount in your check register as if it were a debit card or check purchase. Also, get back to your initial spending list and write down the amount you have spent next to your items. Keep a running total.

If you think you might be tempted to use your credit card, get a metal mixing bowl, fill it with water, toss your credit card in and slip that bowl into your freezer.

The Rest of the Year

The fun doesn’t stop here. Think about the holidays all year round. Four years ago, at a January sale, my husband admired a deeply discounted shirt. He asked me to get it for him for Christmas the next year. I stored it in my closet and pulled it out a year later. Get that desktop electric fan for Aunt Molly next September.

Check through your holiday cards and giftwrap supplies now. Pick up more on sale this coming January. If you find sales before then, stock up.

Plan to save throughout the year for next year’s holiday spending. Divide your total holiday spending budget by 12. Set aside that amount each month to get ready for next year. Open a new savings account to separate the spending amount.

Even the most careful money managers can wake up with a Holiday Spending Hangover. Paying off these bills every month on into the autumn can be unpleasant. By planning ahead and keeping track of your spending, you can enjoy your holidays more and carry that contented feeling into the next year.