The INDEPENDENT, December 2, 2010
Page 21
Tips provided to help you avoid holiday spending hangovers
by Jason Alderman
At this time of year, many
people overindulge, whether
it’s overeating or drinking too
much at holiday parties, or
spending too much on gifts and
decorations. You’ll regret the
former the next morning; but
with overspending you may not
feel the hangover effect until
the bills come due in January.
Here are a few tips for man-
aging holiday expenses to
avoid a holiday spending hang-
over:
Budgeting. Before spending
a dime on holiday expenses,
calculate how much you can af-
ford, relative to your overall
budget. Many financial plan-
ners recommend spending no
more than 1.5 percent of annu-
al income on holiday expenses.
Consider:
• Will your savings cover a
few months’ expenses in case
of a layoff, unexpected medical
bills or another financial emer-
gency?
• Can you pay off all holiday-
related bills within a couple of
months?
• Do you already struggle to
pay your monthly bills?
• Would you need to sus-
pend retirement savings to buy
gifts?
Scale back. Examine how
much you’ve spent in past
years and look for areas to trim.
Consider: gifts for family,
friends and coworkers; decora-
tions; new clothes/accessories;
gift wrap and cards; special
meals; year-end gratuities; and
travel-related expenses. A few
tips:
• Review old credit card and
bank statements to jog your
memory.
• Arrange gift lotteries with
family, friends and coworkers
so you each buy fewer, nicer
gifts.
• Suggest pooling resources
to make a sizeable group char-
itable contribution rather than
individual gifts to each other.
Get organized. Once you’ve
determined your overall holiday
budget, make a list or spread-
sheet with columns for:
• Everyone you need to shop
for – relatives, friends, cowork-
ers, service providers, etc.
• Spending limits and gift al-
ternatives for each person.
• How much you actually
spend on each gift. (Over-
spending on one present
means trimming somewhere
else.)
• What you gave each per-
son – to avoid giving them the
same thing next year.
• What each person gave
you. That way, you won’t acci-
dentally “re-gift” something to
the same person.
• Other expenses (decora-
tions, etc.)
Gift cards: If you give gift
cards, several changes were
made to laws governing these
cards. For gift cards sold on or
after August 22, 2010, the
Credit Card Accountability, Re-
sponsibility and Disclosure
(CARD) Act of 2009 requires
that:
• Money loaded on gift cards
must not expire for at least five
years from date of purchase or
after funds were last added.
• If the card expires but the
funds haven’t, you can request
a free replacement card.
• Inactivity and service fees
may not be charged until after
12 months of inactivity; after
that, only one such fee may be
deducted from the balance
each month.
• All fees must be clearly dis-
closed on the card or its pack-
aging.
A few additional tips:
• Note return policies for
stores and online shopping
sites. Watch for deadlines, ex-
clusions for sale or clearance
items and restocking charges.
• Retain receipts. Many re-
tailers will refund the price dif-
ference if an item goes on sale
within a few weeks after pur-
chase.
• Check whether your credit
card agreement provides free
product warranty extensions
and/or price protection (i.e., will
reimburse the difference if you
find an identical item for less).
Jason Alderman is a financial
expert who directs Practical Money
Skills for Life (www.practical-
moneyskills.com), a free, award-
winning financial education pro-
gram.