AVOIDING THE HOLIDAY DEBT BLUES

Thinking about shopping for holiday gifts yet? Economists expect consumers to spend less this coming year due to rising gasoline and other energy costs, but that doesn't mean that shoppers won't spend more on gifts than they planned. During the holiday season in 1999, for example, consumers spent 27 percent more than they planned on for holiday gifts, according to the International Mass Retail Association. Average family spending hit $1,067, with men outspending women.

Excess holiday spending is sometimes what finally pushes a financially troubled family into bankruptcy. Despite a robust economy, personal bankruptcies remain near an all-time high. Here are some tips from Certified Financial Planner professionals on how to keep your holiday debt free.

Make a gift list and check it twice. Don't spend so much that you regret it in January when the bills come in. Determine how much you can afford to spend overall and divide that amount among the people for whom you want to buy gifts. You can build the list by browsing through catalogs and store windows for ideas and prices, just don't buy anything yet.

Stick to the list and avoid impulse buying. You probably are familiar with the advice to never go grocery shopping without a list (or when you're hungry). The same advice applies to holiday shopping. Sticking to a list reduces expensive impulse shopping, which is typically what gets people into financial trouble.

Track what you spend. Inevitably, you'll buy some things on impulse. At least mark down on your list what you've spent so that you can keep the overall spending within limits. Like any budget, if you overspend in one area, try to underspend in another.

Shop early and take your time. Starting early allows you time to shop for bargains and take advantage of sales. People who do most of their shopping the last minute don't have time to shop for bargains and they are more apt to ignore their budget and spend any amount out of desperation. If you shop on the Internet, check out the possibilities, but sleep on it before actually ordering gifts.

Take cash and leave the credit cards home. Credit card companies push cards hard around the holiday season, with low introductory rates and other incentives. However, many planners feel that credit cards often lead to excess holiday spending (as well as the rest of the year). In addition, you run the risk that your financial world may take a turn for the worse, such as a job loss or unexpected emergency expense, about the time the holiday bills show up on your cards. Take cash. You're less apt to overspend and you're spending money you have.

Be creative. Gift certificates to baby sit, house clean or do something else special for someone make not only great personal gifts but inexpensive gifts for those on a tight budget. Kids especially find this technique useful. Baked goods and homemade crafts also are appreciated gifts. A family photo at a family gathering can be a far more cherished and lasting gift than a new tie.

Delay some purchases. Perhaps you and your spouse, or a close relative, might agree to wait to buy some gifts for each other until after the holidays, and concentrate instead on the kids. That reduces your immediate expenses and you can take advantage of the post-holiday sales.

Watch the nongift expenses. With the focus on gifts, it's easy to overlook the associated expenses around the holidays. These include Christmas trees, long-distance telephone calls, travel, wrapping paper, decorating, postage, party food and drinks, and entertainment.

Talk over a tight budget. If the budget is tight, let the family know you won't be spending as much this year and why. Most likely they'll understand. You might combine this with making charitable gifts to less fortunate families, such as helping out in a soup kitchen or delivering food.

Start saving for next year. You can alleviate much of the financial stress by tucking away money each month in a holiday fund. Start in January and you'll have a nice little fund by this time next year.

Keep giving in perspective. Sure, it's nice to give generously, but keep it in perspective. The best gift you can give your family is financial stability.

This article was produced by the Consumer Affairs Dept. of The Financial Planning Association and provided to you courtesy of Nigel B. Taylor, CFP, Santa Monica, California. If you have any questions or concerns regarding this, or any other financial topic and are a resident of Southern California, please call me at 1-800-444-2237 (California residents only please), or click on the "MORE INFO" button to arrange for a free initial consultation in the comfort of your home or office.