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Tips To Rein In Your Holiday Spending

Some of the biggest countries in the world are staggering under huge debt loads, as are Canadian consumers, according to the Bank of Canada and Finance Minister Jim Flaherty.

But, cheesh folks, it's the holiday season. What is a poor gift buyer to do?

The U.S. just had its biggest shopping day of the year, Black Friday, and spending is way up from last year for the first few days of the official holiday season, even though real income there is stagnant.

Spending is expected to be higher in Canada, too. A Royal Bank of Canada survey found that Canadians expect to spend six per cent more on gifts this year than last.

That would appear in keeping with the latest data from Statistics Canada, which showed retail sales up one per cent in September, the largest month-over-month increase since November 2010.

But if you don't want to go further into the red, there is loads of advice out there telling you how you can rein in your own holiday spending. We've gone through quite a bit of that advice to come up with this list of top tips.
1. Make a list, check it twice

Canadian consumer debt

Average personal debt in Canada, excluding mortgages: $13, 058 (Royal Bank survey)

Debt to income level: 147.3 per cent (Statistics Canada)

Consumer debt: 94 per cent of GDP. (Even in Greece it's just 65 per cent and in Italy it's only 53 per cent; all 2010 figures)
RISING DEBT LEVELS Loans, credit card debt continue to creep up

On the list should be who you are buying for and what they are getting, even the stores where you plan to shop for the gifts.

Really serious shoppers have a shopping list from early on and buy gifts when they are on sale during the year. If you stick to the list you can avoid those impulse buys, which make sticking to tip #2 more difficult.
2. Set a spending limit

Set a total spending limit and stick to it. That requires keeping track of your spending and adjusting your plans as you purchase individual gifts.

You can also set up a separate bank account for gift buying. If you start in February or March, deposit one-tenth of what you spent during the past holiday season each month.
3. Avoid plastic

It's simply easier to keep spending under control if you don't have a credit card or debit card with you when shopping.

Especially to be avoided are store credit cards. The initial offer may be 10-20 per cent discount on your purchases. But if you don't pay off the card in full when the bill arrives the next month, the high interest charges could quickly dwarf the discount.

Also, opening new lines of credit leads to retailers checking your credit score and that score drops for 12 months if there are multiple inquiries.
4. If you do charge, pay off quickly

About one-quarter of Canadians will use credit cards to finance their gift buying, according to TD Canada Trust. But you should only do so if you know you can pay it off immediately. Also, pay the balance in full because it's likely you will be charged interest on the total spending for that costly month if you don't.
Make a list of the gifts to buy and set spending limit before heading out to gift shop at malls like the Laurier shopping centre in Quebec City. Make a list of the gifts to buy and set spending limit before heading out to gift shop at malls like the Laurier shopping centre in Quebec City. Jacques Boissinot/Canadian Press

Putting $600 most of the $640 the average Canadian will be spending on gifts this holiday season, according to the Royal Bank on your credit card and then making the minimum monthly payments, with interest at 12 per cent, for example, could cost an extra $320 and take seven years to pay off.

Use the credit card with the most favorable terms. And consider interest rates, schedules and reward programs.

Avoid fooling yourself by spreading your spending over multiple cards.
5. Do your research before you shop

Compare prices online even if you don't shop online so you know the prices when you hit the stores.

If you do shop online, stick to reputable sites, pay attention to shipping costs and dates, and use a credit card that comes with insurance in order to cover your purchases if they are lost, stolen or damaged.

If there's going to be an in-store sale, you might find the promised discounts are already marked down if you shop after 6 p.m. the evening before the sale.

Is it about the things you give (and get)? Do you better remember who you spent the holiday with five years ago, or the gifts you got?