Last year, instead of crowding around the tree on Christmas to shred wrapping paper and exchange gifts, Neale Godfrey took her children to the hospital to feed patients a turkey dinner. Her family opted for a holiday filled with rich memories in lieu of expensive presents, which is one bit of advice she's giving to cost-conscious parents this season.
"Everyone thinks Christmas will be ruined if they don't spend money," said Godfrey, author of
Neale S. Godfrey's Ultimate Kid's Money Book
. "But that sends the wrong message about this holiday. Why don't you do something as a family? It makes such a huge impression on the children, getting them involved."
By keeping the holiday spirit alive without succumbing to the wanton consumerism that comes with it, clever holiday shoppers can be generous without breaking the bank. From how you pay for it to where you find it to what you give, here are seven tips to keep Christmas under control.
Tip 1: Make a List, Check it Twice
More than any other tip, making a firm budget before you start shopping will ensure that you don't go crazy and overspend. Don't think of it as putting a price on love. You're just setting monetary amounts for each person on your list so you can avoid impulse buys that wreak havoc on your budget.
Give That Gift Again
Christmas in January
Know the Magic Words
Only Buy Gifts for the Kids
Make a List, Check it Twice
Price Before You Buy
Give Your Time, Give Yourself
Source: LowerMyBills.com, TSC
"We state over and over that making a list is the single most important thing you can do this holiday season," said Rudy Cavazos, director of corporate relations for Money Management International, a nonprofit credit counseling agency. "That and once you're done shopping, stop stopping."
If you're an especially generous giver, it helps to put that habit into perspective. A gift is just a token of appreciation, not a representation of how much you love them. And yet, nearly half of all American adults said they knew someone who overspent on gifts to impress other people, according to a recent poll conducted by credit counselor Myvesta.org.
Expensive gifts don't pull on the heartstrings the way a handwritten card can, so err on the side of simplicity. "Ask people what they got last year some time and they're gonna go blank. The thing that makes holidays special isn't gifts, it's the memories," said Steve Rhode, president of Myvesta.org and author of
The Path to Happiness and Wealth
Tip 2: Cash Only
The best way to keep yourself from spending too much is to only spend what you have, sticking to hard currency to finance your shopping. More than $120 billion was spent on credit cards between Thanksgiving and Christmas last year, according to CardWeb.com.
Ironically, many of the people who spend days scouring the malls for the best deals, end up picking the worst way to finance them. After six months of making the minimum payments, a $1,000 Christmas shopping spree would cost $1,088, including interest. That's 9% more expensive than using cash.
Tip 3: Make it a One-Card Christmas
But the best advice is not always the easiest to take, so those who can't fund a cash-only Christmas should consider using plastic, but only use one credit card to easily keep track of spending. Now that the
has cut rates by 50 basis points, credit card rates have dipped a bit and savvy shoppers can find cards with rates between 7.9% and 9.9%, said Cavazos.
"Make sure you get one with a minimum of a 20-day grace period," he said. "Because you don't need to wait until the statement to make a payment. If you make a payment within the grace period, they won't charge interest on those purchases. People always forget this."
Tip 4: Avoid the 10% Discount at the Register
It may seem like a good idea to sign up for that store credit card to get the 10% discount, but experts recommend you pass up the offer -- store cards have some of the highest interest rates in the industry. Besides, opening multiple new credit lines can cause you to forget how much you've spent and will ultimately lower your credit rating.
"That 10% discount is not nearly as significant as you think it is," said Cavazos. "That sale item you bought in December, once it's paid off in March, will cost so much more after the interest you accrued."
Tip 5: Shop on the Internet
One easy way to save money is by going online, where there are no crowds to fight and store hours to remember. Not only is online shopping more convenient, you'll be a lot less likely to make an impulse buy when faced with the prospects of filling in all those forms asking for your credit card information and shipping address.
"You completely avoid that peer pressure to keeping buying more at the mall. And many online retailers are offering free shipping and no tax on the purchases you make," said Cavazos. "This is a great cost-saving concept if you're on a tight budget and can't fight the urge to buy that one last thing."
Tip 6: Use Coupon Codes and Comparison Shopping
Online retailers are a bit sneaky when it comes to discounts and free shipping. Many ask customers to type in a coupon code before checking out in order to receive a discount, but don't always publicize what these special code words are. Smart shoppers should check out a site like coupon-codes.net, which has a searchable database of codes used at all the popular shops, like Amazon.com, Cooking.com and KBToys.com.
And even if you're not going to buy online, you can still do some window shopping. Instead of driving from mall to mall and running from store to store, you can just go to a comparison shopping site to see how much those items cost, what they look like and even what other people think about them.
There are a plethora of these shopping portal sites out there now, including MySimon.com, Dealtime.com and BizRate.com. Both AOL and Yahoo! have their own shopping portals, as well. These guys are good information sources, but take their recommendations with a grain of salt. Just like the phone book, many of the "top" companies listed have paid money to receive top billing.
Tip 7: Give Nothing or 'Regift'
You could save even more money by making it a kids-only Christmas and getting gifts for the little ones in the family, opting to treat the adults to a nicer Christmas dinner instead.
And when it comes time to tip the paperboy or give something to the mailman, there's absolutely nothing wrong with giving them a gift that you received for yourself -- just don't forget to change the card. Nearly 40% of people surveyed by Money Management International said they've regifted -- a number that's even higher among rich folks.
Ultimately, the easiest way to save money is to stop spending it without thinking first. "If you really feel like you have to buy someone just one more thing, think about this," said Rhode. "In the last five years, the number of self-storage places in this country has doubled."