Michael Gutter, Assistant Professor, Family Financial Management

Think back to January 2007, do you remember getting the bills from the holiday season and the sticker shock from spending? Do you know how much you spent over the Holidays?  You should try to reexamine your holiday records from last year in preparing for the upcoming holiday season.

Ask yourself: Did I/we go over what we had intended to spend? Many Americans tend to spend more than intended during this time of year. This is because stores and the media make it easy for us to get swept up in the moment. Or we simply have forgotten things or people when we set up our initial plans for the holiday season.  Whatever the reason, overspending can leave us with a Holiday spending hangover; mostly in the form of greater debt.

Perhaps the best remedy for this is to have a plan and strategies  to help you make decisions so that you do not get caught up in the spirit and spend more than you are comfortable doing. 

Here are several tips to help you with your holiday shopping.

1. Create an overall holiday spending limit. What is the most you want to spend in aggregate for the holiday season? This should not include gifts but other things such as travel should you be visiting relatives or friends for the holidays.
2. Make a list of people you need to buy things for. Try to think of what you have in mind for each person. If it is not a specific item, then you should think in terms of specific dollar limits. Without setting this in advance it can be easy to say “He would love this game or she would love this sweater” only to see that you are spending much more than you wanted on that person.
   Check to be sure that the total you plan to spend when looking at each person  is not exceeding the amount you wanted to spend for everything.
3. If you have access to the Internet, you should check out which stores carry the items you are looking for at the best prices. If you start early you might be able to order some of this online and possibly save some money and time. However, be sure to confirm that the delivery timing works with your families’ plans.
4. Shopping around the first time can be a good idea too. If you are not sure what you want for certain people, shopping can provide you with some good ideas. However, do not buy anything that is not on your list before you get there. If you see things for someone, go home and think about what you saw. If you decide you want it, then you should add it to your list. Remember, you should only buy things that were on your list before you got to the store. New things you see should be written down and then go home and think about them. If you decide they are what you want and they fit your budget, then you can go back and get them. This simple cooling off period to have an honest conversation with yourself can save you from those impulsive purchases. 
5. Do not take credit cards with you when you go shopping at least for the first time you go shopping. If you do not have your credit cards with you, you are less likely to spend more than you planned since many of our impulsive purchases are possible only with using credit cards. Instead make a list of the things you wanted that you did not have cash for – things you would want to charge and then go home.
   Go over your list with a spouse, trusted friend, or even relative. Remember everything you plan to charge must still be paid for. Before you charge things, you should be certain as to when you can pay them off. This waiting period and even having to discuss your plans can help you to find alternatives to charging things or help you prioritize what you will and will not be able to do this year. This cooling off period can help you avoid impulsive purchases you may later regret.
6. Plan to pay off anything you charge on the holidays in January or within 1-2 months at the longest. Considering the holidays come every year, we will never be able to get ahead if we are still paying off debt from last year when you begin your holiday spending for this year. Consider this when you are setting your overall budget for the holidays, if you cannot pay of what you charge in this timeframe, you should reconsider some of your intended purchases.

Remember the holidays are about spending time with loved ones and celebration; presents are part of the fun but should not cause a holiday spending hangover that you regret.