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Make A Plan This Holiday Season

Screen shot 2009-11-13 at 4.10.04 PMIt’s no surprise that many people say they always spend too much during the holidays. That’s a problem, particularly when the excess is floated by credit cards.

So how do you keep from kicking off the new year in a load of debt? To start, you need to know what, exactly, your budget is. I’ve developed a handy calculator that can help you do the math, so go ahead and run your numbers now.

You’ll see that I’m suggesting you spend no more than 1.5% of your take-home pay on the holidays.  Why?  Because in my experience, that’s an amount most people can pay off by February — if not sooner.  You’ll see in the calculator’s results that putting the holidays on a credit card and then going the minimum payment route to erase them can have you paying for this holiday season through 2013 (or beyond)!

Once you have your magic figure, make a list of the people you typically purchase gifts for, and how much you can spend on each person, using your overall budget as a guide. (Be sure the amount you settle on for each gift is inclusive of shipping charges, taxes, and other incidentals.) Not only will organizing your thoughts into a list keep you from forgetting anyone, it’ll also help fight off distractions, like the cashmere sweater your mom would love but, sadly, you can’t afford. And remember that if you seem short on cash, you can always turn to inexpensive or even free gifts – offer to baby-sit for your best friend’s kids — joint gifts for couples or families or (a personal favorite) Secret Santas.

One final, favorite tip: If you’re like me, you might have a few gift cards you’ve accumulated over the last few birthdays or holidays. There’s nothing wrong with using those for your holiday shopping – it’s essentially free money to add to your budget, and no one will be the wiser.

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