This Christmas, have a game plan to be merry without going broke
FARGO — Santa makes his list and checks it twice. That's also a good financial strategy to avoid spending too much on Black Friday and throughout the holiday season.
Budgeting is where it starts, said Alicia Kellebrew, a financial counselor with The Village Family Service Center in Fargo.
"You have to take everything into account," she said, including house and car payments, groceries, utilities and medical care.
"People have a tendency to slack on that stuff to afford Christmas, but they're doing it backwards," Kellebrew said.
After paying for the essentials, festivities are funded with what's left. That includes holiday food, travel, gifts, party clothes, family pictures and cards.
"(People) think they need to just look at just the gifts. And they're like, 'Oh, yeah, we can comfortably do $2,000 on Christmas,' " she said. "But they didn't take into account all that other stuff. So when that other stuff hits, too, they're kind of paralyzed by that."
A budget forces you to be honest about what is doable, she said.
"There's this overinflated sense of we need to impress people for Christmas or for holidays," Kellebrew said. "And I think that's very damaging."
Have a game plan
A game plan is important for Black Friday and Cyber Monday sales. People tend to focus on the money they think they'll save while they shop, she said. But by the time the shopping spree is over, they spend $200 more than they intended.
"I have friends that just go (out shopping) and they're like, 'Oh, I've got this TV for $50, and I got this Xbox for $60, and they come home with all this stuff and no real plan for where it was going, but it was a good deal," Kellebrew said. "You have to be aware of that. Sometimes that whole 'It's a good deal thing' convinces you to spend more than you know you're supposed to spend."
Also, don't worry about spending a set amount per person, she said.
If you find a great deal on a sweater for $50 and you spend $100 on a present for someone else, "nobody is going to know that, nobody is going to care," Kellebrew said.
Cash or credit?
The decision to make Christmas an all-cash proposition or to put it on the credit card depends on each person and their ability to stick to a budget, she said.
Problems come when people put purchases on their credit cards and just pay minimum monthly payments, she said. Also, paying by credit card can be a slippery slope for many people.
"It's not really sinking in for them where that money is going," said Kellebrew, who suggested keeping a running list of holiday purchases.
At this time of year, many stores will offer no-interest promotion plans for credit cards, Kellebrew said. That's great if you have discipline, but it can be a mistake if not handled properly.
Often, those low- or no-interest offers have an ending date with an important incentive. If the purchase is not paid off by then, the consumer, may get zapped with all of the interest that accumulated from Day 1, she said.
A frugal feedbag
If the holiday grocery budget threatens to get thrown way out of whack because of a big meal, "there's no shame in asking your friends or family to contribute somehow (with a dish)," Kellebrew said. "That can get expensive if you're feeding 20 people and you normally feed three.
"A lot of times, people are scared that it's going to look bad. Or they feel bad asking to people to bring things," she said. "It's better to be a little bit honest up front, than to saddle yourself with debt that you're going to be stressed about paying off."
It's in the mail
Many people forget to allocate money to ship items to relatives and friends around the country.
"That can get spendy," Killebrew said.
At the same time, many stores offer free shipping, she said. "Sometimes people are bad about leaving money on the table, when there's a potential discount or a way to get it cheaper," she said.
So, do some homework.
"I won't pay full price for something if I can possibly find a better way to do it cheaper," she said. "There's no sense to it. ... Any little bit you save adds up."
The gift of time
Kellebrew encourages people to think outside of the gift-wrapped box.
"Maybe instead of exchanging gifts, (people can) make gifts of their time," she said. "Maybe they could all volunteer together to help at the food shelf or the soup kitchen. There are just different ways to celebrate this season of giving and being charitable than just buying things."
For friends with children, "I volunteer babysitting services. It doesn't cost me anything, but for them, that's a valuable gift because it saves them money and allows them to get out."
And focus on experiences.
"My mom says the best Christmas present she gets is when we come home and spend time with family," Kellebrew said. "I think people overlook that."
Luck of the draw
And who says you have to buy for everyone?
"I'm always the person that advocates for being that innovator in your group and saying, 'Look, there are just too many people for us to be buying a present for everybody. Why don't we just throw the names in the hat (for a gift drawing) and do it that way?' " Kellebrew said.
"It's hard to be the one that mentions that, because you feel like you're admitting that you're not financially strong enough to do it all, but nine times out of 10 there's going to be more than one person in your family group" in the same situation with holiday spending, she said.
Donate with a plan
The holidays inspire many people to be extra generous. Kellebrew said it's important that the heart be guided by the head.
"For some people, whenever they feel compelled to do it, they might drop a $100 bill somewhere, and if they don't account for that, they end up short somewhere else" in their budget, Kellebrew said.
"Figure out what's most important to you, what you can afford, and what your expenses are."
If you don't have enough for a donation, "there's always your time. ... That's helping, too."
For next year
Now is the time to plan for next year, Kellebrew said.
"If you want to have $1,000 available for next Christmas, you need to start setting aside $84 a month now. Then you'll have that pot of money whenever it's time. You won't have to worry where it came from, and you won't have to overextend yourself, and you won't have to pay off that debt."
She suggested having an automatic transfer from your checking to your savings every month.
But if you have savings set aside for car repairs or medical emergencies, don't make the mistake of raiding those funds for Christmas, she said. Keep the emergency funds for emergencies.
Stop digging now
And if you realize you're already in over your head, put the brakes on the spending now, Kellebrew said.
"Sometimes people get in the hole and they keep digging. If you realize you've put yourself behind the eight ball, you need to go back to that budget and tighten it up, so you can pay down on what you've overspent on."
Cut down on entertainment spending or eating out, Kellebrew said. Or figure out a way to "pick up a little side gig" to increase your income.