Feature Article: Avoiding the January Spending Hangover

Did you wake up last year with a post-holiday spending hangover? You know what I mean – come January when all the gifts are opened and the parties are over, the credit card bills begin to arrive. Sadly, it takes the average American who uses credit cards to finance Christmas six to seven months to pay off the holidays. (Many families I know use their tax refunds in May to pay off the last of the holiday bills. Do you?)

No matter how hard they work to control spending and credit card use the rest of the year, many people rely on credit cards to generate the type of holiday they and their families have come to expect. They let obligation and even guilt drive them to spend way more than they can afford.

To avoid that January spending hangover, consider this: At the root of most post-holiday debt are unrealistic expectations and lack of planning – and there’s still time to address both.

Great expectations: We expect the holidays to do too much and mean too many things, and many of us – women in particular – try to be too many things. Not only does it lead to overspending in an effort to meet expectations of family, friends and co-workers – it’s exhausting as well.

Try something different this year. Ask your family what they enjoyed most about celebrations in past years. Maybe it was baking cookies with Grandma. Maybe it was just being in one another’s company after dinner. You may be knocking yourself out for things that really aren’t most important to the people around you. Consider dropping those family traditions that take time away from what you and your family really care about and create new ones that will hold more holiday meaning for family and friends.

If you tend to do most of the work yourself to prepare for the holidays, here’s another tradition you should consider – delegate! Share responsibilities more equally among all family members, including children. Whether it’s shopping, preparing and mailing greeting cards, baking, cooking, gift-wrapping or decorating, when everyone participates, it can increase enjoyment and meaning for all.

Getting organized: Stores have found that the length of the buying season is the single largest indicator of holiday sales, more significant than the economy. Impulse buying makes up 50 to 80 percent of all holiday spending, and shoppers who keep buying right up until December 24th are most susceptible.

Once you and your family have decided what traditions to enjoy, start making lists. First, list who will do what and then make assignments. Next, create a gift list, who to buy (or make) for, a budgeted amount to spend and gift ideas for each person. Add it up and refine the list as necessary to purchase all the gifts within your spending limit. And don’t forget a list for all of your other holiday purchases – indoor and outdoor decorations (including the tree), tips, donations, food, party goods, baking supplies, beverages, gift wrap, hostess gifts, cards and postage. When you sit down and think it through, these non-gift expenses can really add up. Make sure your plan fits within your spending limit for these items.

When you go shopping, take your lists with you and refer to them often, checking off each item as it’s selected – and when you’ve checked off all items, STOP!

Even if you have to use credit cards this year, having and keeping to a spending plan will greatly reduce your impulse spending. And for next year, consider committing to a debt free holiday, and start saving early so you can avoid credit card debt all together.

There is amazing pressure to buy during the holiday season. So do yourself a favor and sit down to strategize. Start by being aware of your expectations. If you choose to have fewer activities this year, and you delegate some of these tasks, this could be a far more restful and fun holiday season. And remember, always plan your buying in advance. A well-crafted holiday plan is like a good roadmap – it will help you navigate through the hectic holiday buying season. In January, you’ll thank yourself.

By Kim Corwin, CRFC, AFC, founder of New Leaf Financial Counseling