By Andrew Housser
If you have trouble staying out of credit card debt, it is important to be kind to your wallet this holiday season. This year's holiday sales are expected to increase 4.1 percent to $586 billion, according to the National Retail Federation. Retailers may be excited about robust holiday sales, but consumers need to exercise restraint. Here is how to survive the holiday shopping season without busting the budget.
1. Set a budget.
After taking a look at your finances, figure out how much -- in total -- you are able to spend this holiday season. Keep in mind that most people spend 10 percent to 15 percent more than planned. Remember to account for miscellaneous items like decorations, any travel, wrapping paper, gift bags and shipping charges if you are mailing presents.
2. Make a list.
To stick to the budget, make a list of everyone you need to shop for along with gift ideas. Remember to include service people who will receive holiday tips such as your newspaper carrier and babysitter. With your budget top of mind, determine how much you can spend per person. Do not be tempted by unexpected deals. If an item is not on your list, it should not be in your shopping cart.
3. Be a cyber sleuth.
If you are purchasing a high-dollar item such as a high-definition television, or are not sure which laptop is best for your teen, search for reputable online reviews. Sites including Amazon.com and Cnet.com offer user reviews and ratings. Once you decide on the product, use a comparison shopping site such as Pricegrabber.com to find the best online price. You may be able to knock down that price or at least get free shipping with promotional codes on sites like RetailMeNot.
4. Stash the credit card.
Research shows that shoppers who use credit cards spend more on holiday purchases than those who stick to cash. Do not be swayed by store credit card offers either. They may save a percentage on your initial purchase, but many carry interest rates of 20 percent or higher. If you cannot pay off the card in full, you will likely end up paying more in interest than what you saved by opening the account. Plus, opening multiple store credit cards in a short span of time can lower your credit score.
5. Consider layaway.
Certain stores including Kmart, Sears and Walmart have brought back layaway programs. It might be too late to get in on one of these plans now, but keep it in mind for next year. With these programs, you make regular payments to pay for goods that the store holds for you. Some stores require a down payment (usually $10 or 10 percent of the purchase amount). When signing up, find out if there is a fee for opening the account, what the store cancellation policy is (will you be charged if you change your mind about the purchase?), and how long you have to finish making payments. Unlike credit cards, you will not pay interest on layaway items. However, you cannot take your purchases home until they are paid in full.
6. Go homemade.
Presents are not always found in stores. Creative (and frugal) types can bake cookies, design personalized stationary, put together a scrapbook or calendar, bead jewelry or offer coupons for services such as cleaning, handyman or car washing.
7. Get a jumpstart.
It might be difficult to start thinking about holiday shopping for 2013 when you are still recovering from this year's festivities. But purchasing gifts throughout the year is a good way to stretch your dollar and alleviate the stress from last-minute shopping. Keep your eyes open year-round for items that family and friends might like. Stash them in one location so you do not forget for whom you have already shopped.
It is easy to get swept up in the frenzy of the season. But remember: If you do not shop smartly, you may end up nursing a holiday debt hangover well into the New Year. Your holiday shopping experience will go more smoothly -- and be less stressful -- if you start with a plan and budget, and stick to them.
| Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC providing comprehensive consumer credit advocacy and debt relief services. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.