A holiday miracle: stay in budget

Tips and reminders for smart Christmas giving
By: Lien Hoang, The Press Tribune
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If in December faces light up at the sight of gifts, then in January they fall at the sight of credit statements. On an individual and national level, the emergence from the recession is marked by cautious spending, as we remember once-foolish practices. After so much scrimping, some are eager to get back into shopping mode. But don’t let Congress’ recent promise of unemployment and tax breaks send you too deep into your pocketbooks. Those who go overboard and over budget try to ignore the debt until January rolls around. The holidays are a time of extremes, and the superlative joy of the festivities makes stark financial realities that much more depressing. It’s useful, then, to be reminded of prudent habits and tips, with the help of local financial planner Kimberly Foss. Pay in cash Yes, you know the cold hard bills limit you to using only the money you have. But Foss, founder of Roseville’s Empyrion Wealth Management, says the limits are also psychological. For instance, if you walk into a store thinking you’ll spend $100 on a person, having to part with the money could motivate you to find a gift for, say, $25. “It totally changes your mindset, when you have to physically let go of the green dollars,” Foss says. Rack up the points This is not to say plastic is your enemy. But if you’re going to charge it anyway, at least do it on a card with rewards points, which can translate into gift purchases. Pay off the balance regularly, or use a debit card with a rewards program, so you don’t have to worry about interest. Foss gives this advice to many of her clients. One gathered all his points among different accounts and discovered he had enough to give out 80 $40 gift cards. Nordstrom offers such incentives among three cards: credit, debit and VISA that includes non-Nordstrom purchases. Spokesman Colin Johnson says he knows people can get overwhelmed, so the retailer works with shoppers case by case. “We obviously want customers to shop with us, but we want them to shop on their terms,” he says. Swap gift cards They are the most requested holiday item, according to the National Retail Federation, with their popularity expected to rise this year. But of the $25 billion going toward gift cards in 2010, more than $2 billion won’t be redeemed. Foss suggests taking your unused cards to an online swap meet. At, you keep 92 percent of your selling price, and can buy others’ cards at 30 percent below cost. In this way, you get rid of unwanted cards and get new ones to give out. Another option: get your money back. For many cards, California law requires merchants to give cash back if the balance is less than $10. Make the gifts This tried and true method became even more appealing as consumers cut back in recent years. Natalie Osborne is sticking to the homemade gifts. Her hands were conspicuously empty last week while she was out window-shopping – well, not even shopping. She was looking, not buying. She learned her lesson from getting into debt in the past and is down to one credit card now, where she used to have seven. “It was kind of debilitating,” Osborne says. She used to spend beyond her means to get Christmas presents, “and what kind of giving is that?” Save a little at a time You can sock away $50 a month in the archetypal coffee tin. To avoid temptation, Foss says, you can also give that coffee tin to your child and tell him not to let you spend it until Christmas. For once, your child’s obstinance can come in handy. Spend a little at a time Buying presents early on not only helps you avoid the holiday rush, but lets you chip away at that wish list over a longer period. That’s standard advice Foss gives her clients, including Jacqueline Matranga. “I tend to go crazy when I see a sale and buy things nobody wants,” Matranga says. But now, she tries to save and shop gradually, including at places she wouldn’t have gone before, like Wal-Mart and Target. Still, it’s a learning process with a little improvement at a time. Next year, as we all say, will be different. Lien Hoang can be reached at