All I want for Christmas is to stay out of debt

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"I hate Christmas," declares a 30-something Realtor, who requested that her name not be used to cloak the shame she feels will befall her if her family knows how she really feels about their holiday demands. She feels pressured to be the genie for everyone's Christmas dreams. Even her stepmother expects her and her siblings to come up with the cash needed to remodel her entire kitchen for the holidays. "That's $10,000," the Realtor says.

Financial planner Reggie Harwell is well aware of the holiday pitfalls that sink Christmas shoppers into New Year's debt. "I hear them all the time," says the financial consultant with AXA Advisors, LLC, in New York. Two years ago, a young woman wallowing in holiday debt sought Harwell's advice. She ran up $5,000 in credit card bills, a debt that her $45,000 annual income couldn't sustain. Harwell urged her to take a hard look at her spending, but a year later, she was back with the same story.

Impulsive Christmas shopping is incredibly tempting for consumers, many of whom shrug off mounting debt, ditch budgets and succumb to pricey gift-giving. While overspending is common, it can and should be avoided. Every 15 seconds someone in the U.S goes bankrupt, and the average American household has $8,000 in credit card debt.

"The reason for the season is the celebration of the birth of Christ, not an excuse for excessive spending," says Alexandria Morris, senior financial analyst with Polaris Financial Management in Chicago.

As for family members who insist on big gifts, Morris advises, "Tell them you can't do it." Further, Harwell urges all Christmas shoppers to set a budget and stick with it. "Pay for all of your holiday purchases with cash or a credit card that you will pay off at the end of the month," he says.

You also can save by finding deals during the off season. Clark Williams Sr., a budget analyst for the State of Maryland, buys most of his gifts the days after Christmas and gives them away the following holiday.

And there are a variety of other ways to keep Christmas spending in check. Morris suggests a grab bag for the extended family and setting a spending limit.

Trevon Clark, a 32-year-old Memphian, prefers to give books, and handmade gifts or baked goods can be cherished and cost-effective gift options. Tiffany Somerville, a Cleveland-based events planner and self-proclaimed "queen of frugality," makes her holiday gifts. "Last year, I gave gifts of basic seasonings, sugar cookie mix and chicken soup mixture in mason jars," she says.

Other gift ideas include making scrapbooks with photographs, writing poems and baking cookies or cupcakes. Re-gifting among friends is also a viable option. Harwell says his friends re-gift books for Kwanzaa.

Ideas also include doling out certificates to family members to do manicures, housecleaning, yard work, personal shopping or any other service you can provide. Or just ditch gift purchases altogether. "Instead of giving gifts, volunteer your time [to a charity] ...," says Harwell. "During the holiday season, we tend to want to keep up with others to show that we do have money. But it's not something you need to go into debt to prove."

How To Stay DEBT-FREE This Holiday

[1] Don't spend more money than you have. Pay cash and use credit cards for holiday purchases. Then pay off your credit cards in January.

[2] With family and friends, organize grab bags or pull names. Set spending limits.

[3] Give a gift certificate offering your services as a baby sitter, housecleaner, gardener or personal shopper. Many will appreciate such a thoughtful gesture.

[4] Take time to make gifts of baked goods, scrapbooks, photo albums and hand-sewn items.

[5] Buy gifts on sale during the off season.

--Ytasha Womack is a Chicago-based freelance writer and filmmaker.

COPYRIGHT 2007 Johnson Publishing Co.
COPYRIGHT 2008 Gale, Cengage Learning