The Ottawa Sun

   Take the red out of Christmas -- stay in the green!
    Don't let all the ho-ho-ho hype leave you hopelessly in debt. With retailers fueling the urge to splurge, overspending and debt accumulation is in overdrive.
    Tame the consumerism monster, recommend experts, by tightening your money belt now to avoid a holiday hangover later. You should be making a list and checking it twice.
    According to Myron Knodel, money expert at Investors Group, "between gift-giving, entertaining, travel and charitable giving, the cost of season's greetings can really add up."
    Most Canadians overall plan to spend the same in 2010 as in 2009, reports a recent survey. "Problem is, for many people that amount may still be too much and they could find themselves scrambling come January," says Knodel.
    Getting caught up in the spirit of giving can lead to receiving big, bad bills.
    "Just as indulging in too much Christmas cheer with food and drink could take months of hard work to take off, the financial hangover could be much worse," adds money guru Kelley Keehn.
    So, make a plan, Stan: Who's in, who's out and how much. And pay now so you don't pay later -- if you can't pay, don't buy it, says Keehn.
    "Stand your financial ground."
    "The single biggest mistake that Canadians make with holiday shopping is not having a plan -- including how much money you're going to spend and when," says Knodel, adding that without a set budget, impulse shopping and spending can skyrocket. Another mistake: Leaving it all to the last minute, which encourages "a final rush of hasty gift-buying ... When you're jammed between crowds and closing time on December 24, the urge to splurge can be irresistible." It's best to schedule shopping excursions for mid-week or early in the day.
    According to Knodel, if you overspend on holiday giving, the real cost of Christmas is expensive credit card debt.
    "Credit card companies typically charge high interest rates, ranging from 18% for a typical credit card, up to 30% or more for a major department store card."
    Think cash or nothing, says Keehn, adding that it's no deal or bargain if you slap a purchase on a high-interest-rate credit card and don't pay it off at the end of the month.
    "Buy only what you have the cash to afford. After all, a frugal holiday season might be your most memorable and stress-free yet."
    Knodel says to make sure that if you are planning to use credit cards to make gift purchases, determine the time period that it will take to pay it off based on your overall family budget, he recommends.
    "If it will take more than 60 days to pay off the holiday purchases, you might consider cutting back your holiday gift budget."
    Thinking of taking a credit card cash advance? Your interest rate on the borrowed amount is likely in the 20% range -- from the moment you swipe your card, says Knodel.
    "So for every $1,000 you borrow on your credit card, you'll pay $200 or more in annual interest."
    Come January, high credit card bills not only eat into everyday living expenses, but RRSP contributions too.
    For those facing post-holiday debt, "you could consider consolidating this debt into a line of credit with a lower rate, which will make it easier to repay. RRSP loans are also available to help you make sure that you don't miss out on this year's RRSP contribution," says Knodel.
    ---
    Shopping tips
    Do
    Give yourself plenty of time to shop.
    Make a budget and stick to it.
    Bring your list -- and check it twice.
    Use cash as much as possible.
    Save up for your purchases to avoid a cash crunch.
    Don't
    Buy more than you need.
    Leave shopping to the last minute.
    Impulse buy.
    Bring your credit card with you.
    Shop alone. Take a buddy who can help you keep your plan on track.
    -- Myron Knodel of Investors Group
    joanne.richard@sunmedia.ca

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