Keeping Holiday Spending Down

Mary Deibel - Scripps Howard News Service

Whether you celebrate Christmas, Hanukkah, Kwanzaa or New Year's, experts say to plan ahead to get a good hold on holiday spending.

"When you don't plan, spending for gift-giving can become a burden," says Charles Brown, head of the National Foundation for Credit Counseling.

"Now is the time to compare your income and savings to your credit-card debt, living expenses and other obligations," Brown says, to have a holiday spending plan in hand before Thanksgiving - and before you hit the stores.

The 2002 holidays come just as consumer confidence hit a nine-year low and when Americans are coping with record-high household debt, which stands at more than $7 trillion and 107 percent of disposable income.

That's why the National Retail Federation forecasts that holiday spending will average $649, with retail sales rising a modest 4 percent to $209 billion over a year ago. "We will be seeing a very cautious consumer this holiday season," says Phil Rist of BIGresearch, which conducted the federation survey.

Federation President Tracy Mullin says that "all retailers will be discounters this year" with sales and markdowns prominent in stores already packed with holiday merchandise.

Catalog sales are growing faster than in-store sales even though postage hikes and a sputtering economy have dampened the mail-order outlook, with the Direct Marketing Association predicting a flat year.

Online sales are expected to soar 15 percent in the fourth quarter, according to Forrester Research, which puts 2002's e-tailing at $20 billion, including $9.5 billion between Thanksgiving Day and Christmas.

Diane Swonk, chief economist for Bank One, says budget-minded shoppers "used to see promotions only after Christmas, but now sales and promotions are a part of the holiday season. You get discounts now, plus coupons to redeem after Dec. 25."

Swonk is bullish on clothing, knickknacks and shopping early when promotions and selections are best despite inventory shortages caused by the West Coast dock strike that briefly stranded holiday shipments of Barbies and other toys.

With a gracious plenty to choose from, sit down to figure that holiday budget, which usually swells by Christmas Day: Edie Clark of the International Mass Retailers Association reports that the discounters' October survey shows that consumers plan to spend $863 on gifts this year - just what they planned to spend last year - but past surveys show they wind up spending between 15 percent and 30 percent more than their initial estimate.

Still, shoppers can help curb their spendthrift ways: Start like Santa by making a gift list, then checking it twice.

Know that kids come first, with the average child getting $350 worth of toys a year, according to industry figures. Wish lists run three or four times as much, so take the chance to sit down and talk with your children about what is realistic and that Santa's sleigh has only so much space for presents for good girls and boys.

Adult gifts can be budget busters, too, especially if you and yours go in for one-upsmanship. If you come from a large, extended family, consider starting a gift exchange where each of you draws the name of someone outside immediate family.

If penny-pinching lacks Christmas cheer:

- Try making something, whether chocolate truffles or baked goods, or a knitted scarf. Children can try their hand, too.

- Give a couple in need of a night out a gift certificate for your baby-sitting services, or give a tribute in the family's name to a favorite charity.

But remember, gifts are only the start of holiday spending. Decide if you want to spend holidays with family, going to parties, seeing old friends, or maybe a trip to get away from it all with bargain air fares and hotel packages you must scout now.

Add up those expenses, including party and travel clothes, then figure decorating costs, cards, envelopes and postage - and don't forget wrapping paper and ribbon. Go back over the total to see what's necessary and not if you've busted your holiday budget.

The credit foundation's Brown cautions to stay the course in December, when last-minute shopping is to be avoided because stressed shoppers spend more.

Keep a running tally of your expenses to make sure you don't exceed what you set aside, and start the new year by paying your holiday bills in full, adds Steve Rhode of MyVesta.org debt counselors, and resolve not to be among those families who overspend the holidays and start every new year deep in debt.

On the Net: nfcc.org

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