Holiday shopping without the financial headaches
Set priorities — and a budget — so you don't break the bank
Looking for a way to keep holiday spending under control?
Consider Downers Grove resident Cindi Duncan. She uses a “matrix.”
(Rich Hein/Sun-Times)
That’s the label her husband, Don Duncan, came up with for the holiday budget she creates each year to assure she spends the same amount on each of their four children, buys them the same number of gifts and doesn’t go over the amount the couple agrees to spend well before any shopping begins.
“I get a list from each of them,” said Cindi, a structural engineer.
At times, that list has been as many as 10 gifts for each of their children, ages 17 to 22.
“I take their lists and make a column for each child, and it ends up looking like a matrix because I assign a price to each item,” she shared. “Somehow I have to end up with the same number of gifts, and at the bottom the total has to be equal for each child. It’s a challenge because sometimes one of them will want some really big gift and then I’ll have to think of a bunch of little small things. As I buy stuff, I’m writing down how much I’ve spent on each item and keeping track of it on my sheet.”
Cindi swears by her matrix.
“We still have a really nice Christmas, but at least I feel like it’s in control now,” she said.
That hasn’t always been the case.
“When the kids were little, I’m sure I spent more than I should have,” she said.
She became more budget-focused after she married Don, a certified financial planner.
“He really cares more about meeting the budget,” she confessed. “I’m more into making sure they have the same number of gifts to open because we sit around and we take turns [opening gifts]. You have to have the same number otherwise someone is sitting there with nothing to open.”
But she agrees setting and sticking to one’s budget should be a priority. She gets no argument from Don, a certified public accountant, partner at D3 Financial Counselors in Downers Grove and former chairman of the Illinois Financial Planning Association. He says once you’ve determined what you can afford to spend, your holiday budget should include every conceivable holiday expenditure “not only just gifts for everybody,” but decorations and expenses for any big family meal.
Plus, don’t forget to allow for eating out, he said.
“People oftentimes when they go out shopping, will go out to dinner,” he said.
So don’t let that be a budget buster.
He suggests one’s budget contain the amount you plan to spend on each person, including a minimum and maximum amount to give one some flexibility while shopping.
He also advises shoppers to use debit cards instead of credit cards to help keep spending in check. But if you use credit, make sure it’s a conscious decision to do so, he stressed.
“Ninety-nine percent of the time the people that I talk to, to the extent that they make a conscious decision to go into debt, one of the things they usually ask themselves is how do you pay it off,” he said. “If you have a plan for that, you’re going to be in a much better position than if you get your credit card bill in January and you’ve got $2,000 that you owe and it’s a total surprise.”
If you do charge, make sure you can pay the bill off within the grace period, he noted.
“If you spend $1,000 on Christmas, and you charge it all and can’t pay it off, and you’re paying 20 percent per year, all of a sudden your Christmas [bill] got a lot higher,” he said. “Christmas should not be a time where you have to struggle to get out of debt as a result of what you’ve spent.”
The National Foundation for Credit Counseling suggests paying with cash and leaving your checkbook and credit cards at home when shopping this holiday season to avoid temptations for unplanned and unnecessary purchases. But if using credit is a must, limit purchases to one card — the one with the lowest interest rate, and make sure you’re able to pay it off within 90 days, the foundation advises.
Financial experts also advise shoppers to be on the hunt for deals, including retail sales, special discounts, coupons in circulars and online bargains. Don recommends the Web site NexTag.com. The comparison shopping site enables visitors to click on the product they’re looking for and learn where the best deals are online.
While this holiday shopping season is just starting, it’s not too early to start thinking about next year. Plan now to create a holiday savings fund and contribute set amounts each month beginning in January, Don said.
If you have no such fund to pull cash from this year and want to avoid taking on debt to pay for holiday bills, the foundation advises that you write down all household and personal expenses for November and December, and for each month, subtract that total amount from your monthly take-home pay. The amount that’s left can be your starting point to help determine how much you can afford to spend.