Some holiday shoppers are feeling a sharp enough pinch in the budget this year that they're heading to the stores with plans to cut their spending.
According to a survey by the Consumer Federation of America and the Credit Union National Association, about one-third of shoppers plan to spend less on gifts this year. Only 15% plan to spend more. (Everyone else expects their spending to be just about the same.)
Those intending to spend less say they need the money for daily expenses, chiefly energy. About one-third of those surveyed already worry about covering their credit card debts in January.
In another interesting, entirely separate, and entirely unscientific survey running on Yahoo! Finance, 11% of people who responded said they don't plan to give gifts at all this year.
Surveys like these, of course, measure people's intentions and not their actual behavior. The annual consumer and credit union survey has evidently found that people routinely spend more than they say they will. As the Credit Union National Association's chief economist, Bill Hampel, said in a Reuters story, "This suggests many households will feel financially 'hung over' in a couple of months unless they do something about it now."
So, what signs indicate that maybe it's time to risk sounding like a little bit of a Scrooge and trim the holiday spending?
- Credit card debt. If you're already carrying a balance on your credit cards, the very last thing you should do is pull out those pieces of plastic to purchase holiday gifts. You're in less dangerous territory when running in the path of a stampeding herd of angry reindeer. Put the cards away and pay for your gifts with actual money in the bank. Try cash if you really need to rein in the spending, but debit cards work just as well. Use the credit cards and your debts, and your interest payments, will just keep swelling. Cut your holiday spending and you'll have more money to pay down your debts.
- Credit card angst. If you identify with the one-third of survey recipients who already feel some stress anticipating January's credit card bills, do something about it now. Harness that fear to set a spending budget and stick to it. There are plenty of other things to worry about in life. Holidays should not be causing you ulcers (unless they're from the prospect of the in-laws visiting for a week, but that's another story).
- Memories of hangovers past. Trim your budget if you've broken out of a slightly hazy delirium in every January in recent memory wondering, "Oh no! What have I done?" That's probably a sign you're not paying attention to your holiday spending at all. Or, it's a sign you're hitting the eggnog too hard.
- Higher everyday expenses. Take a cue from the good intentions of the fine folks who responded to the consumer and credit union survey. If your daily expenses have gone up this year and your income hasn't kept pace, holidays can be the ideal time to trim your spending and keep the annual budget in line. You probably think I'm insane for suggesting that, given the intense spending pressure at the holidays. But, consider, who will be doing the accounting if you cut $5 from your budget for every gift purchase? The recipients certainly won't be. They'll love whatever they get. Similarly, no one will notice if you're using leftover Christmas cards from years past, or if they get home-baked cookies instead of a purchased gift this year. Everyone loves home-baked cookies.
- Emergency fund missing in action. If you're spending every last cent on the holidays, leaving nothing in the bank to cushion an emergency, think about trimming your spending. Give yourself a pat on the back for not going into debt, but consider the risk you're taking by eliminating your safety net. If something terrible happens in January, you won't be able to use leftover candy canes as dollars. Set something aside for a rainy day.
- Major emergency. If you've had a health setback, a job loss, or some other major financial strain this year, consider eliminating or drastically curtailing your gift giving. Your friends and family will understand, and they'll want to support you while you get back on track. You can lavish them next year when you're in better financial shape.
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