Eight Steps to Avoid Post-Holiday Debt

In our wistful imaginations, the holiday season is a simple, joyful time of snowfall, sparkling trees and soft candlelight. But in 21st century reality, it's a carousel of stress and spending. Think about it. You put off shopping 'til the last minute. Then, frazzled and anxious, you hit the malls, spending big bucks on "obligation gifts" and trying to forget the credit card bill that will be arriving in January. As you sit fuming Grinch-ishly in a crush of traffic, you wonder, "Where did the joy go?"

From a personal finance standpoint, the holidays has become a nightmare. Somehow we've come to think we have to spend and spend and spend every year, yet few of us can truly afford to do so. If you're going into debt to buy frivolous gifts for each one of your 18 nieces and nephews, something's wrong.

The typical American is now spending 130% of his or her disposable income. Holiday spending is not so much the problem as it is a symptom of our society's lack of financial self-restraint. For too many of us, the holiday spending frenzy yields an unhealthy and often paradoxical mix of entitlement ("My family deserves a big Christmas!") and resentment ("I can't believe I have to drop $250 on groceries and spend all day cooking again this year!").

The good news? It doesn't have to be this way. Armed with a realistic budget and the desire to change your ways, you can get off the holiday carousel and actually enjoy the holidays this year. Here are a few suggestions:

1. Make a spending list based on hard numbers, not emotions. I am big on budgets. Indeed, my book, How Much Is Enough? Balancing Today's Needs with Tomorrow's Retirement Goals, helps you delve into your money attitude, identify your personal pitfalls, separate your wants from your needs, and chart out a realistic financial road map.

Look at your holiday preparation as a time to get a better handle on your overall finances. When you have some hard numbers in front of you, you'll be much less likely to overspend out of guilt or desperation or just simple ignorance of how much you've already spent.

But what if you "crunch the numbers" and realize you really can't afford a big holiday this year? Accept that you're going to have to downsize. If you're already in debt, digging the hole deeper is no solution. At least you know -- and if having an extravagant holiday is important to you, you can plan for one next year.

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