Holiday Shopping Tips

Ten Holiday Shopping Tips

1. Pay cash. No, that's not hopelessly old-fashioned. Recently I was interviewed on a radio talk show, and the host shared her holiday shopping M.O.: She always pays in cash, preferably $100 bills. "The bank teller always looks at me strangely when I ask for hundreds, but it makes you think twice when you go to buy something," she explains. "You really don't want to break a Benjamin." Her co-host on the show does his holiday shopping with a debit card: "When you're out of money, you're out of money."

2. Know thy enemy. If you're going to pay by credit card, use the one with the most favorable terms. That may sound obvious, but many people carry as many as five bank cards in their wallets and don't always know what the interest rate is on each card. Nor do they know that if they exceed their credit limit or pay late their rate could jump to 30% or higher, and they could be slapped with a penalty as high as $39.

3. Keep a running tally of your credit-card spending. When you come home from a day of shopping, immediately subtract what you've spent from your checking-account balance. Not only does that give you a visual record of how much you've spent, but also it ensures that you'll have enough money in the account to pay the bill when it arrives.

4. Have a plan for paying off your bills. If you overspent last year, it's time to cut back. But slashing your budget in half can be like trying to quit smoking cold turkey -- it often doesn't work, and your failure makes you feel worse than before.

5. Get easy gifts out of the way early. I have a friend who sets aside money for cash gifts -- to the paper boy, the babysitter, the hairdresser, the trash collectors, out-of-town nephews -- before Thanksgiving. That way those presents don't have to come out of her December shopping budget.

7. Think outside the gift box. Plenty of alternatives are less expensive, and more fun, than buying a gift for every sibling, in-law, niece and nephew. Instead, have a family gift exchange in which you each choose one name and put more thought than money into selecting a single gift.\

8. Be creative with the kids. Let's say you're planning a trip to Walt Disney World during winter break or spring vacation. Stuff the kids' stockings with guidebooks, maps and Disney memorabilia, and let them plan their excursion. You'll save money on holiday gifts, and they'll enjoy weeks of pleasure without becoming bored.

9. Look ahead to next year. If you came up short on cash this year, start an old-fashioned holiday-club account with a modern twist: an online savings account with a bank such as HSBC Direct or ING Direct. You can easily set up an automatic transfer from your checking account each month, earn a competitive rate of interest, and have a tidy sum when next holiday season rolls around. Customers who bank with Wells Fargo can track their savings goals with an online tool called My Savings Plan.

10. Count your pennies. A few weeks ago I was waiting for my sandwich in a sub shop around the corner from my office. When I bent down to pick up a dime from the floor, a gentleman standing next to me struck up a conversation. He told me he always picks up coins (even pennies) and tosses them into a big jar, along with the change from his pockets every day. That's the money he uses to buy his holiday gifts -- and every year it adds up to between $900 and $1,100.