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Planning Debt-Free Holidays - Brief Article

IT'S that time of year again, when retail shops, discount stores, malls and credit card companies begin to think of creative and costly ways to help you part with your hard-earned dollars. Promotions and promises, special sales and savvy savings and cash-advance checks all are available for one low price--your peace of mind.

If you want peace this holiday season, you should start planning now to find the best and most debt-free way to give gifts to your loved ones. From the simple to the elaborate, whether it is toys for the young ones or stocking-stuffers for your co-workers, finding the perfect gift at the right price can be a time- and money-consuming venture.

But financial experts say you don't have to give until it leaves nothing except dust in your wallet. With a little planning, careful budgeting and a little self-control, you can face down those cold January bills and escape the post-holiday blues.

Dr. Gregory Price, an associate professor of economics at North Carolina A & T State University in Greensboro, says that instant gratification is rarely, if ever, a good thing, and that you should always avoid taking on too much debt. The key, Price says, is to save, save, save, all the time, not just when the holidays are approaching.

"There's always the temptation during the holidays to spend, spend, spend. But one should be disciplined and save, and draw from their savings, if possible," says Price, who holds a doctorate in economics from the University of Wisconsin-Milwaukee. "As for the holidays, be moderate [when spending] and always think about the consequences of excess."

PLAN AHEAD AND SAVE

Price recommends placing at least 3 percent of your income into a savings account. If you want to set aside extra funds for holiday travel with that special someone or gifts for friends and relatives, a money-market account is a virtually risk-free way to build a Christmas nest egg. Price calls the accounts the "modern-day equivalent" of the Christmas Savings Club. You can arrange with your local bank to have at least $50 to $100 taken out of your checking account each month, and that money bears interest. "That's what I do to force myself to save," Price says.

Another way to remain debt-free is to use your credit cards wisely and responsibly. Paying off credit cards with a high interest rate after the holiday season will most likely give you a post-holiday hangover that's not easy to cure.

MAKE A LIST AND START EARLY

If you're looking for this year's hottest toy on Christmas Eve, you'll either miss the boat or end up sinking a good chunk of change into that one single gift. Experts suggest that you plan your purchases ahead of time, and then save to realize your budget. Also, stick with the middle retailers for things like toys and household products to stay on budget.

"Budgeting is the key to everything," says Vincent Osaghae, an associate professor of accounting at Chicago State University and a certified public accountant. "It's the road map to [being] debt-free."

Budgeting year-round will put you in a more secure position when the time for buying Christmas presents rolls around, according to Osaghae, who's a partner in Obaseki, Osaghae & Company, CPAs, a Chicago accounting firm.

Osaghae says that finding a gift and determining the best price can be as easy as a phone call to the store or a journey through cyberspace. It may be quicker to check prices and availability on the Internet, and on-line shopping is fast becoming the way to secure presents with little hassle or overspending.

In using the Internet, Osaghae knows exactly what gifts to buy for the special people on his list, and he's "not tempted to buy more, or [buy] what I did not budget for," he says.

LOOK FOR DISCOUNTS AND GIVE FROM THE HEART

Merchants tend to mark items down as we get closer to Christmas. After the rush is over, most retailers cut their prices greatly to clear out their unwanted inventory. That's a great time to stock up on items like decorations or the classic gifts that never go out of style for the next holiday season or two. It's also a good way to go if you're geographically separated from a friend or relative. Buying a present after the holiday and shipping it can mean big bargains.

Giving a gift that comes from the heart is probably the best way to keep worries at a minimum and the heart full. If you're in debt, don't take on more debt to purchase gifts. Have your children make Christmas cards, or give books with special meaning. The greatest bargain of all is remembering the true meaning of Christmas and keeping yourself free--free of debt, free of worry and free to enjoy the holiday season.

START TODAY--NOW--PLANNING FOR CHRISTMAS 2000