Holidays
Lay out an affordable gift-giving plan - and stick to it
Guard your budget during holidays
BY LULADEY B. TADESSE
The News Journal, Delaware
Total holiday spending this year is estimated to reach $220 billion.
"They are not at the point where they are ready to let loose like drunken sailors,"
said Phil Rist, vice president of strategy for BIGresearch, which conducted the
survey of more than 7,000 consumers for the retail group. "But they are feeling
better about the economy."
Many consumers will pay for their gifts using credit cards, but financial planners recommend using cash - particularly if consumers already are in debt. Between 60
percent and 65 percent of consumers have an existing balance on their credit card,
according to Consolidated Credit Counseling Services Inc. in Fort Lauderdale, Fla.
In 2003, consumers had an average of $2,294 in credit card debt spread out on two
cards, according to Myvesta.org.
Tehan said consumers should try to pay off their holiday shopping debt within three
months. Unfortunately, many consumers end up paying for gifts six months or more
after the holidays are over, he said.
Consumers who can't
afford the minimum payment on a credit card, who are using a
cash advance from another card to pay the minimum, or who are postponing basic needs
such as a doctor's appointment because they're tight on cash, should think twice
before buying gifts, let alone using a credit card, said Howard S. Dvorkin, founder
of Consolidated Credit Counseling Services.
Kimberlee Orth, senior financial adviser at American Express Financial Advisors
in Wilmington, agreed.
"Try not to use your credit card if you don't have to," she said. "If you don't
have the money, period, don't buy it, because it is never a good idea to go into debt for something like a Christmas or a wedding present. It is just not advisable."
Consumers who buy gifts with checks or debit cards also should be careful to track
their spending, said Jean Ann Fox, director of consumer protection at the Consumer
Federation of America in Washington.
New federal banking laws let banks process checks quicker than before. That can
lead to more bounced checks and overdraft fees ranging from $20 to $35.
Fox recommends that consumers regularly balance their checkbooks and resist impulse
shopping.
Karen Soldano, 57, of West Chester, Pa., doesn't consider herself an impulse shopper,
but she also doesn't like being limited by a set budget. She
expects to spend more
than her usual $1,000 this year on presents for 17 or so family members.
She'll also continue her tradition of giving friends and neighbors holiday gifts
that aren't expensive and can't be purchased at a mall.
"I always give cranberry bread as gifts," Soldano said. "Some friends demand cookies
for Christmas."
Consumers shouldn't hesitate to be creative with their gift giving, especially if
they're strapped for cash this holiday season. Experts suggest that people with
large families "do a Pollyanna," drawing a name and buying a gift for that family
member only.
Consumers also can make their own gifts, perhaps creating a gift basket with home-baked
cookies or other items that add a personal touch.
Another possibility is giving the gift of time: Offer to baby-sit, clean the house,
do the dishes, wash the car. Consumers even can create coupons on their home computers.
"People really need to think about the true meaning about Christmas," said Mary
Rammel, manager of Consumer Credit Counseling in Wilmington. "Is it about the best
gift you can buy, or is there a deeper meaning?"
