Hold the Reins on Holiday Spending by Terry Savage on Creators.com

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Hold the Reins on Holiday Spending

Q: The holiday season is approaching, and I know I'll spend more than I planned. How can I maintain control this year?

A: The holiday shopping frenzy is a classic example of "mind over money." For sure, you know what you can and can't afford to spend this holiday season. But just as surely as a meal of turkey and stuffing leads to a nap on the couch, those big red signs with the word "SALE" can turn your self-discipline into desire.

One must exercise self-discipline when seeing those big red signs with the word "SALE" in order to avoid overspending this holiday season.

There is nothing I can write that will work if you aren't aware of this process. Retailers count on it. The idea of consumers stampeding into stores brings to mind a herd of sheep running blindly and following each other off a cliff!

So I'll give you some Terry's Tips for holiday shopping — or holiday saving. But unless you add the necessary ingredient of self-discipline, you can be sure that you'll be sorry in January when the bills come due.

Attitude adjustment: I don't want to be your shrink here, but as you make your gifting list, ask yourself not only whom you are shopping for, but why you will be getting each person on your list a gift. Is it to show love? To overcome guilt? Simply an annual habit? Are you gifting competitively?

Think about each person on the list while you ask those questions. If you listen to your own answers, you'll get a better idea of how to approach the shopping process.

Appropriate gifting: Once you understand the motivation for gifting, you might find a more appropriate way of expressing your feelings this holiday season. We all know that gifts get returned or re-gifted. That's because while the gift might be expensive, it is obviously not appropriate. So if you're giving out of guilt, consider making a donation to charity in that person's name. That also works well if you're giving out of love.

Be creative: If you're giving out of love, then give of yourself — maybe by creating a "coupon book" of services such as driving a senior to shop for groceries or to the beauty salon.

Parents can make these coupon promises to kids — for a ride to school on snowy days or a trip to the circus when it comes to town. Kids can create "coupons" promising complaint-free services such as walking the dog or taking out the trash.

Stop competitive gifting: You may be competing with yourself to top last year's present. Or you may be competing with your siblings to see who can give Grandma the "best" present. Get together with your competitors, and end this spiral of spending. Either agree to contribute to one large present (premiums on a long-term care insurance policy for Mom and Dad) or institute a "grab-bag" approach, with each person drawing a name and rules about spending a limited amount on the gift. If you've been competing with yourself every year, propose a truce. Instead of spending, give the greatest gift — an honest expression of love and trust.

The usual: You don't need me to tell you the usual stuff. Make a list. Set spending limits. Carry only your debit card (and opt out of automatic overdrafts).

But that's the same thing I've told you every year — and you told yourself, too! Why didn't it work to make a shopping budget? There's a simple answer: because of your own emotions. That's why all the lists in the world won't do the trick this holiday season.

This column is written for "grown-ups" — not for the kids in the shopping carts who are entitled to "want" everything they see advertised on TV and on store shelves. So ask yourself, "Isn't it time I became an adult and learned to control my holiday spending?"

This recession year, of all years, is the time to face facts. Yes, there will be more sales and better bargains this year. Merchants are desperate to get your dollars. But money spent on a "deal" is money down the drain just as surely as if you had paid full price. And if you charge that "bargain" on your credit card, you will be paying full price and more in interest and remorse next year.

That's the Savage Truth.

Terry Savage is a registered investment adviser and is on the board of the Chicago Mercantile Exchange. She appears weekly on WMAQ-Channel 5's 4:30 p.m. newscast, and can be reached at www.terrysavage.com. She is the author of the new book, "The New Savage Number: How Much Money Do You Really Need to Retire?" To find out more about Terry Savage and read her past columns, visit the Creators Syndicate Web page at www.creators.com.

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