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Happy Holidays on a Budget

Happy Holidays on a Budget
            The holiday season is upon us and although the economy still looks grim, the spirit of giving and celebrating the season is alive and well. Jana Darrington, USU Extension Agent in Utah County shares how we can still give and enjoy the holidays while spending less.
            Planning Ahead. Create an overall holiday spending limit. What is the most you want to spend in aggregate for the holiday season? This should not only include gifts but other things such as travel should you be visiting relatives or friends for the holidays.
Dr. Michael Gutter, University of Florida, suggests that you make a list of people you need to buy things for. Try to think of what you have in mind for each person. If it is not a specific item, then you should think in terms of specific dollar amounts. Without setting this in advance, it can be easy to say, “He would love this game or she would love this sweater” only to see that you are spending much more than you wanted on that person. Check to be sure that the total you plan to spend when looking at each person is not exceeding the amount you wanted to spend for everything.  
Preventing Impulse Spending. Do not take credit cards with you when you go shopping, at least for the first time. If you do not have your credit cards with you, you are less likely to spend more than you planned since many of our impulsive purchases are possible only with using credit cards. Go over your list with a spouse, trusted friend, or even a relative. Remember, everything you plan to charge must still be paid for.
“On store credit cards, people of all ages and education levels seem perpetually unaware of the negative impact of saying yes on their FICO score”, observes Megan O’Neil- Haight, University of Maryland.
Paying for Holiday Purchases. Plan to pay off anything you charge on the holidays in January or within 1-2 months at the longest. Considering the holidays come every year, you will never be able to get ahead if you are still paying off debt from last year when you begin your holiday spending for this year.
First, take a hard look at what you typically spend on gifts, decorations, clothes, wrapping paper, cards, special meals and year-end gratuities. At the same time, look at the rest of your budget and estimate how much you can afford to spend without racking up debt. Some financial planners recommend spending no more than 1.5 percent of your annual income on holiday expenses. Alicia B. Betancourt of Monroe County Extension suggests that if you haven’t saved that much, look for ways to cut back, but make sure you do it before the holiday rush starts.
Laura Royer, Osceola County Extension gives the following budget idea.  Consider using the envelope method once you set a budget for how much you plan on spending on each person/item. Divide the amount per person/item and put your cash in each envelope. This will help you keep track of how you are spending your money and how much was spent.
Buy Last Year’s Electronics Models. Last year’s electronics often work just as well as this year’s, and can cost 25 percent less.
Offer a Service as a Gift. Offer to cook a meal for your friend, babysit for your sister, or start a book club (to be hosted at your house). Are you a financial planner and have a brother-in-law who’s a Spanish tutor? Consider swapping services as an alternative to buying gifts.
Make a Gift. Sometimes you just can’t put a price tag on homemade gifts. Consider making a loved one a CD of their favorite songs, or a scrapbook using pictures they’ve posted on Facebook of their European travels. Knit a scarf for a family member or friend. Ornaments, wreaths, and centerpieces are other inexpensive options.
Don’t be Afraid to Ask for Gift Ideas.  Not sure what to buy a family member or friend? Rather than overspending on something you’re not confident they’ll like, simply ask what’s on their wish lists. You could end up spending less money on something you know they’ll love.
Split the Difference. If you have a great gift idea in mind that exceeds your budget, talk to friends and family about sharing the cost. If your niece wants a tablet for college, or your dad could use a new leaf blower, having several people chip in could be well worth it.
Think about Buying Used. Buying used doesn’t always mean second-rate. You can find some great deals on antiques, collectors’ items, books, or even toys by shopping at your nearby thrift store or a neighbor’s garage sale.
Build Gift Baskets. Dollar stores might sound like an odd place to shop for gifts, but not if you’re creative. You can create “theme” gift baskets for different people. Example: For a movie theme, buy a popcorn bucket and toss in some packages of popcorn and candy and some discount DVDs.
By using your head before using your money, you’ll be able to keep your holiday budget happy while you save on gifts without compromising quality or creativity.


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