Budgeting for the Holidays

Only 104 more shopping days! And with money tight all over it's going to be a challenge to make this holiday season festive without going over budget. This week, Tracy Davidson, consumer reporter for WCAU in Philadelphia, talks about how you can get a handle on your holiday shopping.

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We can't be talking about Christmas!

Oh, but we are. I know, I know. You're barely surviving the back to school rush. And if you're like me, you can't believe we're already seeing Halloween candy in the drug stores. But yes, it is time to talk about Christmas, or at least how to pay for it! At this writing, we have a little less than 15 weeks.

Credit counselors are already being bombarded with calls from people who can't make ends meet. In Philadelphia, where I live, the Consumer Credit Counseling Service is taking almost nine thousand calls a month. So at a time when there's very little wiggle room in many of our household budgets, we're about to face the pressure of holiday spending.

So what can you do? Here are four tips for smart holiday spending.

  1. Pay down your credit cards. My hope for you is that you'll save enough money not have to go the credit card route but, if you are going to be using your credit cards, we want your balance to be under control. It's a bad for your credit score when you're nearly maxed out on your credit cards and it means you'll only qualify for higher interest rates. So start paying them down right now. If you have good credit and pay your bills on time, call your credit card company (the 800 number is on the back of your credit card). Tell them you've been a good customer, you pay on time and you'd like them to lower your interest rate. There's a good chance they will.

  2. Create a spending plan. You can't decide how much you need to set aside or save unless you know how much you plan to spend. So make your list early this year. Who are you buying for and how much do you want to spend on each gift?

  3. Make some extra money. One of the things I'm doing right now is a good fall purging around my house. I'm giving plenty of stuff to charity. I've also made a pile of clothes to go to consignment. I have a pile of items to put on eBay and Craigslist. I also have a few gadgets to sell on-line (at gazelle.com and venjuvo.com). A lot of people are also considering a second, seasonal job to bring in some extra money.

  4. Save some money. I know, I know. Everyone says, "There's no way." But you can do. Do it the old fashioned way: when you get your paycheck, pay yourself first. Don't trust yourself? Let a financial institution do it for you. For instance, you can open an ING Direct Orange Savings Account. Label it "Holiday Shopping," and decide how much money you want coming out of your checking account and into this savings account on a weekly basis.

It'll help you avoid one of the biggest holiday money hazards—last minute emotional spending! So make a plan, and then stick to it.

Check out All That & More with Tracy Davidson.

Read more of Tracy's blog posts.

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