Don't let the holidays wreak havoc on your finances
By Terrence Daryl Shulman
Even in recovery, the first of the year can come with a hangover. Many of us spend beyond our means, especially during the holidays, and that financial misstep always ends with the same result: a bad taste in our mouths and a fresh layer of debt to pay down.
According to Consumer Reports National Research Center, despite the recession, in 2009 shoppers cracked open their wallets during the holiday season and gave retailers a much-needed sales boost. The average holiday shopper planned to spend $699 on gifts but ended up shelling out $811—nearly 20 percent more than intended. Further, half of shoppers pulled out plastic to buy some or all of their gifts, spending an average of $896—nearly 30 percent more than intended.
Holiday overspending can create a hangover of debt felt long after the gifts are put away and decorations packed. Compulsive buying is a disorder affecting nearly 18 million people, according to a 2006 Stanford University study, and impacts men and women equally. Those recovering from other addictions, such as alcohol or drugs, are particularly susceptible to compulsive shopping during the holidays.
Most addictions tend to escalate during this time, when stress is high, family tension is predominant, travel is often required, routines are often disrupted and triggers—holiday parties that often include libations and peer pressure—are prevalent. Too, during the holidays we may feel added pressure to shop for others and ourselves to fill a void or make up for the many ways in which we feel deeply inadequate.
Here are five ways to remedy a holiday spending hangover:
- First, keep in mind that you are not alone.
- Second, take an honest assessment of the damage and talk to a trusted family member, friend or debt counselor about your concern (we’re only as sick as our secrets).
- Third, if you are able, return any gifts you have bought or received for a refund or, at least, a store credit to be used at a better time.
- Fourth, immediately figure out a debt repayment plan, develop a budget for the coming months and stick to it.
- Fifth, don’t be too proud to ask for help emotionally or financially if you’re so tapped out you’re having trouble making ends meet. Although nobody should enable an overspender, you might find support if you are serious about owning up and breaking the cycle. This includes calling the credit card companies to negotiate a more favorable debt repayment plan, making serious changes to your habits and maybe selling things or dipping into savings.
No matter if your overspending is seasonal or a year-round problem, it’s important to find out what is driving the behavior. Some shop for image, some to people-please or gain love or approval, some to fill a void and some because of pure habit or ritual. Meeting with a counselor, reading books, attending support groups (such as Debtors Anonymous), praying, meditating and doing some real soul-searching are necessary to get to the root of the problem. The important thing is to address the problem as soon as possible. The gift of breaking the shopping and spending addiction pays dividends not only financially but also emotionally and spiritually.
Avoid the Headache>
- Pay off last year’s debt before shopping for the next holiday season.
- Make a list of what you will buy and how much you will spend on each item before you hit the stores or the internet.
- Set price limits with friends and family members.
- Create a holiday savings plan through an employer or on your own.
- Make your own gifts.
- Donate your time to a charity that’s meaningful to you.
- Keep an eye out for sales, free shipping offers, free gift wrapping and coupons.
- Pay with cash or check or debit card (or lowest interest credit card as last resort).
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