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6 Steps to Salvaging Holiday Finances

There are two clear camps of consumers this time of year: them and the rest of us.

They are the people who take long naps the day after Thanksgiving instead of hitting the mall at the crack of dawn to catch the Black Friday sales. They save ribbons and gift bags and have an updated holiday card mailing list color-coded in Excel. They bring cookies decorated with red and green sugar sprinkles for the entire office to enjoy. In fact, they unfailingly bake those cookies from scratch.

As for the rest of us ...

  • We congregate at the mall and fight tooth and nail for parking spots and the last bedraggled Tickle-Me-Whatever in stock.
  • Our main gift selection criterion is not whether the recipient will like what we choose but how easy the thing is to wrap.
  • We're the ones standing in long checkout lines swearing that next year will be different. Really, it will, because we will plan ahead. We swear.

While it's true that many big-ticket items are challenging to budget for ahead of time, let's be honest: The holidays don't exactly sneak up and blindside anyone. That said, fear not: It's not too late to salvage the season, both financially and psychologically.

The not-quite-Martha way
It's still November, right? No problemo -- you've got plenty of time to pull off a meaningful, well-organized, financially responsible holiday season. I stole some ideas from those holiday gurus mentioned above and modified their secrets so that we un-Marthas in the crowd can save both our sanity and some dough this year.

1. Revisit last year's expenses: Did you keep track of what you spent last year on holiday festivities? No worries: Your lenders sure did. Dig up your credit card statements from last year for a horrifyingly accurate account of the November-December damage. You can do one of two things now: Challenge yourself to spend less, or challenge yourself to spend no more than you did last year. Ignore the shoppers on TV who say they feel good about the economy and appear to be bolstering it singlehandedly. (If you're still paying for 2006's overindulgence, click right over to our no-fail cure for holiday hangovers.)

2. Actually make a list of giftees: It may be a cliche, but shopping with a list will keep you honest. Next to each person's name, write a few gift ideas and a target dollar figure. Pick a range, and make it reasonable. Voila: your holiday scorecard. If you are facing financial hardships that you didn't have last year, make sure to aim low. With so many purchases made on impulse, committing a list to paper and, more important, sticking to it can save you a serious bundle. Or, even better ...

3. Leave the credit cards at home: Yes, credit cards are convenient -- they offer purchase protection, rewards, and an easy way to track your spending (albeit after the damage is done), and they take up less wallet room. But they're also too convenient. Studies show that people spend more -- and more impulsively -- when no actual cash changes hands. Instead, carry the cash you need for each shopping trip. I guarantee this all-cash diet will cut down your holiday spending by at least 10%, and likely much, much more.

4. Don't dawdle: Malls are many a budgeter's downfall. 'Tis the season for temptation. With a list in hand, you won't be tempted to wade through the crowds to pick up a little something for yourself. Even better: Avoid the bricks-and-mortar stores altogether and shop online. Gift wrapping? Card? Shipping? Click. Click. Click. Done. Done. And done. (See "Shopping Strategies for Serious Bargain Hunters" for insider tricks.)

5. Get something back: Go ahead and be a little bit selfish. If you must use a credit card, use one for all your holiday purchases -- and rack up the miles, cash back, or whatever reward comes with your plastic. (This recommendation is only for those who pay off their balances in full each month.) Not only will you have a record of what you spent for next year, but you'll actually get something back.

6. Set a deadline: The holidays are really about being with the ones you love. It's hard to play board games with the kids or trim the tree when you're standing in line on Dec. 24. Set a firm deadline for your shopping, wrapping, shipping, and even housecleaning. You'll be a hero to your family if everything's done two weeks before the big day.

For more ways to keep your sanity for the next several months, see:


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