Holiday Cost Control

From the Chicago Tribune

My wife, Georgina, gets all the credit for this: As presents for our two grandchildren, she creates little picture books just for them.

For the stories in these books, she writes about things we've done or are about to do. For the pictures, she cuts out and pastes photos from magazines and newspaper advertising inserts (she is on the lookout for pictures of Santa Claus and a Christmas tree now).

You don't need to be a professional writer to do this. All you need is imagination and love. These gifts have been priceless, delighting the children and nurturing their love for reading. But the cost in dollars and cents has been minimal, just for paper, pen, scissors, coloring crayons, staples and paste.

As for holiday gifts I have received, one I always remember fondly is a set of postcards from my daughter, Veronica. I play correspondence chess, a form of the game in which you write your move and mail it to your opponent. I use the cards all year long; every time I mail one, I think of Veronica and smile.

Again, that's a gift that keeps on giving and shows thoughtfulness and love without a need to overspend. In the midst of another holiday season, it's time to think of how we want to celebrate it--by yielding to crass materialism or remembering what love and sharing are all about.

My intention, let me emphasize, is not to throw cold water on merchants' holiday sales. In fact, I've found better bargains this year than last, both in stores and online. I just want to inject some sanity into the process.

So I've put together a series of common-sense suggestions gathered from recommendations from financial advisers, consumer and industry groups, credit counseling agencies and personal experience.

- The first suggestion--it may be too late this year--is to save in advance for the holiday season. Georgina and I start saving every January, putting a set number of dollars aside every month.

Some advisers suggest opening a separate savings account just for holiday spending. (We have one multipurpose savings account for holiday, travel and hobby expenses). That way you know how much you will have when the season starts, you will have what you want if you save faithfully, and you will be less tempted to spend more.

- The second suggestion is to decide, again in advance, how much you are going to spend for the holidays. Include everything, from greeting cards and decorations to travel, parties and gifts. Then make a list and stick to it.

"This may seem to be a fairly basic thing to do, but think of the times you've gone grocery shopping and found yourself buying things that weren't on your grocery list. Holiday displays are even more enticing. Avoid impulse buying," recommends the government-run Federal Citizens Information Center, which lists excellent ideas for consumers on its Web site, www.pueblo.gsa.gov (go to the site and do a search for holiday spending).

My recommendation, if you lack the discipline to control credit card spending, is to leave the card home when you go shopping and take only the cash you set aside to spend.

If you do buy with a credit card, I recommend you immediately deduct the amount of the charge from the balance of the checking account you will use to pay the credit card bill. Doing so will give you a true picture of where you stand.

- Another suggestion: Discuss putting a limit on gift spending with relatives and friends, or even whether to exchange gifts at all (they may appreciate your candor). Instead of exchanging gifts, for example, consider pooling your money to make a donation to a charity in all of your names.

Also, use this time of year as an opportunity to educate your children on responsible spending and credit habits, which of course means you need to act responsibly yourself.

"You can do this by helping your children develop a savings plan for holiday gifts, and work with them to design and stick to a reasonable budget for their holiday spending," said Daniel Drummond, a spokesman for Your Credit Card Companies, a consortium of leading credit card issuers.

"Use credit--and specifically credit cards--only within your ability to repay," Drummond said. For more good tips on handling credit, check out the Web site www.yourcreditcardcompanies.com.

----------

Humberto Cruz is a columnist for Tribune Media Services. E-mail him at yourmoney@tribune.com