How to Avoid Going Broke During the Holidays

Whether they mean to or not, many people go into debt for the holiday season as they purchase gifts. The bright, warm feeling that comes with the season tends to blind people to just how much they're shelling out. When they run out of cash, far too many turn to credit cards to save them and end up paying for gifts for months, even years after the recipient gushes over it. But it doesn't have to be this way; setting some strict guidelines before you start your holiday shopping will help make sure you don't end up making a New Year's Resolution to spend less next year.

First, set your spending limit. Decide how much you're going to spend for each person, and stick to it. If possible, you can even discuss with your family or friends how much to spend, so no one will feel hurt if they get a less expensive gift. If your family is large or you have several co-workers to buy for, consider setting up a "Secret Santa" project where you each draw a name out of a hat so you only have one person to spend for. Or get a gift the whole workplace/family can enjoy and share together.

You need to set a spending limit on gifts for your children as well, even if it may hurt to do so. Many parents want the holidays to be something their children will always remember, but they'll also remember the arguments and frustration afterwards as you struggle to come back from the debt you incurred.

Don't forget any other expenses you may rack up beyond gifts. Will you be traveling to a friend or family member's house? Do you need to find your own accommodations for the reunion? What about entertaining other people in your house? These hidden costs can easily soak up much of your holiday budget, so don't forget them when you make plans. Try keeping a notebook with what expenses you need to keep track of, who you want to purchase gifts for and how much you plan to spend. Search the Internet for price ranges and possible deals, so you know what you're looking for when you actually purchase the item (not to mention avoiding those irritable holiday crowds!) Many websites will have product reviews from consumers, so be sure to read them when making a decision.

Always have a reason for purchasing something holiday-related. While at that moment you may feel you can't live without something, "it looks so pretty" is not usually a good reason to fork over your hard-earned money for it. If it's a gift, make sure it's something your recipient will have a good chance of wanting and not something you're giving them to prove you have money. If you just can't resist whipping out a credit card for your holiday purchases, consider leaving the plastic at home. You can lose track of your spending habits far too easily with a credit card than with cash. If you simply have to use credit, immediately after your purchase you can write down how much you spent in the notebook you're keeping for holiday spending. Don't forget to pay the credit card bill as soon as it comes in, or you may find yourself still paying for the gift next Christmas.

Preparation is the key to success for holiday shopping. Yes, it's a wonderful feeling to enter the month of October or November secure in the knowledge you've finished your shopping already, but too many people try to save and spend their holiday limit within a short period of time. We have 12 months in a year; if you stash away a little every month, the gut-shot to your wallet won't hurt quite as much than if you start saving in July and buy all your gifts by September. Try to form an annual savings plan to help keep you out of debt or reaching for your credit card when you run out of cash.

Lastly, don't be embarrassed about shopping for holiday decorations when they're on sale after the season is over. This way you can stock up on items that you would be purchasing next year (at full price) anyway, and no one will ever know you purchased them on clearance. With the above tips you should be able to enjoy the holiday season a little more, and not be worried about paying for your financial indiscretions as you sip your eggnog on New Year's Eve.