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5 Steps to Salvaging Holiday Finances

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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 ... well, we're typically the folks in the long checkout line the day before Christmas swearing that next year will be different. Really, it will, because we will plan ahead. We swear.

At least that's what we all said last year. The good news is that it's not too late to salvage the season, both financially and psychologically.

The not-quite-Martha way
I stole some ideas from those holiday gurus who manage to pull off meaningful, well-organized, financially responsible holiday seasons year after year and modified them for the un-Marthas in the crowd.

1. Revisit last year's expenses: Did you keep track of what you spent last year on holiday festivities? No worries: Your credit card company sure did. Dig up your credit card statements from last year (or look it up online) 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. I suggest the former. (If you're still paying for 2008's overindulgence, click right over to our no-fail cure for holiday hangovers -- paying off your credit card debt.)

2. Actually make a list: It may be a cliche, but shopping with a list will keep you honest (so long as you stick to it). 'Tis the season for temptation. With a list in hand and the power to stick to it, you can save a serious bundle. Next to each person's name, write a few gift ideas and a target dollar figure. Pick a range, and make it reasonable. Voila: You've got your holiday spending scorecard.

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. Don't have the cash to spend right now? Layaway is becoming de rigueur again among retailers like Sears Holdings' (Nasdaq: SHLD  ) Kmart and Sears stores, as well as TJX's (NYSE: TJX  ) T.J. Maxx and Marshalls stores. However, if you are using a credit card for purchases, make sure you ...

4. 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. (Note: 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 -- which comes in handy if you're using a free online budgeting tool such as (a Motley Fool partner) -- but you'll actually get something back.

5. 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 money shortcuts for busy people, see:

Dayana Yochim will not -- she repeats -- will not spend December in Ultra Hysterical Holiday Triage Mode (again). She doesn't own shares of the companies mentioned in this article. Sears Holdings is a Motley Fool Inside Value recommendation. The Fool has a disclosure policy.

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5/27/2016 4:00 PM
SHLD $13.30 Down -0.04 -0.30%
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