Trying to avoid that credit card buyer's remorse you felt back in January (and may be still paying for)?
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While we may start our holiday shopping with good intentions to not rack up debt, the rush and excitement of the season -- coupled with unexpected outings and entertaining -- always seem to get the better of our wallets. And this year, the National Retail Federation forecasts that Americans are set to spend 3.9 percent more for the holidays than last year.
"We've been brainwashed," says Mary Hunt, author of "Debt-Proof Your Christmas" and founder of debtproofliving.com. "Forty years ago, no one in their right mind would have even considered putting gifts on credit. We as consumers have allowed ourselves to believe it's OK to spend money we don't have now."
The first way to turn things around this year is to put together a realistic budget, says Jeanette Pavini, Coupons.com savings expert. "Don't just think about gifts. Factor in decorations, donations, if you're going to be sending out holiday cards, the postage costs, etc. You have to think of everything." Some items to keep in mind: holiday tips, teacher or coach gifts and outfits for holiday photos/parties, etc.
So where will the money for all those extras come from? Check out these expert tips for keeping your holiday spending frugal but festive...
1. Cash in on rewards. You might not realize that your credit or debit card purchases might be accumulating points that you can put to good gifting use. "Before you begin holiday shopping, carve out some time to visit your credit card's website or call a customer service representative to make sure you know your current rewards balance and all the ways you can earn and redeem rewards," suggests Brian Meier, director of rewards marketing at Discover. For instance, many creditors allow you to redeem points for store gift cards or merchandise that you can then give to others. Just be sure to place your order a few weeks in advance so you'll have it by the holidays.
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2. Get creative. "If everyone in the family is on the same page with spending less, it's fantastic," says Hunt. Some families draw names so they only have to buy (and receive) one meaningful gift rather than several smaller trinkets; others opt to only buy for the children in the family. Hunt says she knows families who take a trip together in lieu of gifts. Another idea is to give an experience (rather than another sweater), such as offering coupons for free babysitting for new parents or a day of activities for a grandchild.
3. Be a deal detective. "Almost every store is offering some kind of a coupon code," assures Pavini, so there's no reason to ever pay full price, whether you shop online or at the mall. She recommends sitting 20 minutes before you shop to locate discount codes and printable coupons for the stores you plan to hit so you're prepared to save.
4. Save on the big holiday spread. Why should the host of a holiday get-together have to foot the entire bill? Start a family potluck tradition, and even incorporate a theme to make it fun and memorable, suggests Pavini. One idea: "Ask everyone to bring something traditional to their family and print out the recipe so every guest gets a copy," she says. Or, plan a less expensive shindig, like a breakfast, or set up a dessert and coffee bar, says Hunt. Bonus tip: Choose less-expensive wines that you put into decorative decanters, and no one will be any the wiser!
5. Use credit cards strategically. "Whether you're a big spender or on a tight budget, the key is to use your credit card wisely and take advantage of the rewards available this holiday season," says Meier. One often-forgotten strategy is to check out your credit card's online shopping mall to buy gifts that earn bonus points, cash back or special discounts.
6. Or, stick to a cash-only policy. If you're not among those who can use credit without abusing it, put yourself on an all-cash diet for the holidays. Hunt says a great way to free up some funds is to repurpose your grocery budget by "shopping" in your pantry and freezer for a few weeks, cooking meals with the items you've already purchased (and probably forgot about!). "Then, make sure you're taking only cash when you go gift shopping, and you'll be a completely different kind of shopper," she says.
7. Hold onto receipts and play the price adjustment game. "Most stores will give you up to 14 days to claim a price adjustment," says Pavini. In other words, if you buy an item and then it goes on sale next week, you're not necessarily out of luck. Many stores will allow you to stop in with the receipt and credit you for the difference. Policies and time frames will vary.
Beyond stores honoring price fluctuations, your credit card may offer its own price protection policy as well. For instance, among the benefits of certain MasterCard cards, if you find a lower price for a new item purchased with your card within 60 days, you may be reimbursed for the price difference. Similarly, Citi Price Rewind allows Citi cardholders to track their purchases for 30 days to look for price drops; if the same item is found for $25 less within 30 days, you can get refunded the difference.
While we all want our holidays to be special, Hunt says to think back to your favorite holiday memories and recall what stands out in your mind. Most likely, it's not the fanciful, magazine-worthy place settings or expensive gifts, but the places you went and the people you were with. Once you can change your mindset and rein in your spending, you can enjoy what truly matters and come out on top financially.