Money experts offer ways to cut holiday spending Posted On: Sunday, Nov. 30 2008 07:15 AM By Don Bolding
Killeen Daily Herald

Financial counselors locally and across the country are advising people to approach holiday spending with prudence and not panic, frugality and not fear. Everyone is jittery and some have lost money in the economic downturn, but it doesn't have to be a blue Christmas.

Some common threads in their messages are to make a special holiday budget and resist all temptation to exceed it; to use cash instead of credit cards because you can't create another $20 bill the way you can make one more charge; and to trim the gift list, possibly to the point of drawing names among family members so that each can receive one special gift or giving presents to children only.

Samantha Hilliard of First Command Financial Services makes those suggestions and advises shopping close to home instead of making out-of-town trips.

"Of course, the price of fuel has gone down," she said, "but trips still cost money for fuel, food and incidentals, and there's so much more in the immediate vicinity now than there was last year.

"Another idea is to give gifts from home," she said. "Older generations can pick this time to hand down family heirlooms and other special things that come from the heart. People can give collections of recipes. Children can write poems for grandparents. They cost nothing, and they're heirlooms themselves if they're written in a person's own handwriting."

Peter Beronio of Mutual Service Corp., also advancing the idea of a budget, said, "Be careful about big-ticket purchases to be paid out over time. Make sure you can afford the payments."

He said he knows of families whose Thanksgiving traditions include drawing names for Christmas at Thanksgiving dinner.

"I would never want to detract from the spirituality of Christmas and the part that giving plays in that, but it's become so commercial that that's all people can see."

He also said he's concerned about people pulling money from 401(k)s and other tax-deferred accounts, not only for Christmas but "strictly out of fear." People of any age incur tax liability for money taken from retirement accounts and pay penalties for money taken out early.

"They couldn't be doing themselves more harm, especially in light of other options available to them that would enable them to reduce their risk exposure and not get hammered needlessly by the IRS," he said.

The American Institute of Certified Public Accountants also pushed budgeting and the idea of shelving credit cards in favor of cash and advocated:

Comparison shopping. "Be an educated shopper and compare prices. You might be able to save $20, $30 or more if you find the same product online or at another store. You might have to invest some time, but in the long run it will save you in the wallet."

Discount shopping and use of coupons. "Many stores offer coupons. Also, many offer early bird specials and discount hours."

Other ideas are on the association's Web site at www.feedthepig.org. (The "pig" is a piggy bank.)

The Better Business Bureau of Central, Coastal and Southwest Texas also recommended a budget and tracking spending.

"A budget should include the amount the family plans to spend on food, travel, incidentals and even a price limit for each person on the gift list," said President and Chief Executive Officer Carrie A. Hurt. "Creating a budget can be harder than sticking to one, but becoming more conscious of holiday spending habits is an absolute must, greatly reducing the chances of an unhappy new year."

She recommended turning the thermostat down when the family is sleeping or away, driving less and staying close to home, and turning Christmas lights on for a limited time each day.

She advocated agreements among families limiting the value of gifts as well as drawing names and otherwise cutting the gift list. She also suggested craft projects to make decorations and gifts, drawing ideas from Web sites and books.

"For those who are crafty in the kitchen, holiday goodies such as baked goods and candies are also much appreciated and inexpensive."

She suggested considering forgoing greeting cards, relying on last year's decorations and using alternative, possibly humorous wrapping paper such as the Sunday comics or retailers' shopping bags.

She noted the possibility of saving through online shopping but said scammers are especially prevalent this time of year and advised checking each online merchant against the BBB's Web site. Some shoppers fall victim to identity thieves, and others pay for goods they never receive.

Can all these efforts to help consumers work to make the season even bleaker for merchants already on pins and needles to balance the ledger sheet? Greater Killeen Chamber of Commerce President John Crutchfield says that to the contrary, they help everybody.

"People should limit spending to what they can afford," he said. "Healthy consumers make healthy retailers. If you buy things you can't afford, you'll have to give them up sooner or later. It was credit abuse that led to the country's current problems in the first place."

He said merchants who encourage reckless spending don't have a workable long-range plan for staying in business. They and their customers will sink together.

"Everybody's in favor of common sense," he said. "The more you use it, the better off everybody will be."

Contact Don Bolding at dbolding@kdhnews.com or call (254) 501-7557.