6 Ways to Avoid a Holiday Season Spending Hangover

It's a holiday season tradition that you don't want to observe. Many consumers spend more than they can afford, often racking up huge credit card balances.

But there's no need to exit the season of giving in worse financial shape than when it began. That's a lesson Suki Eleuterio learned after spending recent years stretching her finances to buy holiday gifts.

"I found myself just swamped in debt and trying to pay off bills from last Christmas and the Christmas before," said Eleuterio, who lives in Fort Lauderdale, Fla.

The marketing and public relations executive resolved this year to control spending, an effort that has her on track to pay off $10,000 in credit card and student loan debt by year's end. She's also tackling holiday gift giving differently than in years past.

Eleuterio, 30, plans to spend about one quarter of the $300 to $400 she shelled out last year on gifts. And she's avoiding credit cards.

"If I can't afford to pay for it right now then I won't buy it," she said.

Here are some tips for managing your holiday season spending:

1. DRAW UP A BUDGET

Santa makes his list and checks it twice. More holiday season shoppers should be as thorough.

Establish a budget that lays out how much you plan to spend on each person on your list. Then stick to it.

"That way you're not walking around the mall with a credit card with a $20,000 limit, window shopping, with no plan, no strategy and no discipline," said John Ulzheimer, of Credit Sesame, a credit management website.

He also suggests capping your gift budget at a level that won't jeopardize your other financial obligations.

"It's almost like going to Las Vegas," Ulzheimer said. "Take only the money that you're comfortable losing."

2. MARRIED? SET LIMITS TOGETHER

More than half of married couples said they have paid with cash to cover up large purchases, and more than one in 10 married individuals has taken out a credit card in their own name to hide spending from their spouse, according to a survey released last month by McGraw-Hill Federal Credit Union.

That's potentially bad news for those couples' finances, if not their marriage.

The trend is a symptom of the pressure many couples feel to impress their significant others, said Shawn Gilfedder, president and CEO of McGraw-Hill Federal Credit Union.

It also reflects how many people don't plan or communicate well when it comes to financial matters.

He recommends using online applications like Mint.com or FinanceWorks.com, which enable couples to share their financial information at a glance.

Eleuterio's approach: She and her husband, Robert, plan to stick to a ballpark estimate they each agreed upon for how much to spend on each other's gifts.

3. AVOID THE CREDIT TRAP

In a survey by the National Retail Federation last month, nearly 44 percent of consumers said they planned to use a debit card or check card most often when buying holiday gifts. But nearly 29 percent said they would rely on credit cards.

Unless you plan to pay your holiday charges in full by the due date, avoid using credit.

You'll pay more in the long-run and carrying higher balances for several months could lower your credit score, making it more expensive to refinance your home, buy a car or qualify for other loans.

4. CASH IN REWARDS

Another way to cut back on holiday spending is to use rewards points that you may have accrued on your credit cards or airline mileage loyalty programs.

Some cards offer cash back, credits against your balance or even special deals to buy gift items from a points redemption store. Major card issuers such as American Express, Chase, Citi and Discover offer some type of points reward program.

5. BEGIN SAVING EARLY

Start setting aside money well before the stores get into holiday season mode.

Although it may be too late for this year, evaluate how much you end up spending so you can budget for next year, said Katie Bryan, spokeswoman for America Saves, a campaign of the Consumer Federation of America.

Once you pay off this season's purchases, start paying into a holiday savings account for next year.

Eleuterio began saving for the holidays a few weeks ago, setting aside about $25-$50 a paycheck.

Here's a worksheet for crafting a savings plan: www.americasaves.org/for-savers .

And if you need help tackling your post-holiday debt, counseling agencies approved by the Department of Housing and Urban Development offer free services. They can be found on www.hud.gov .

6. GIVE OF YOURSELF

Eleuterio skipped out on Black Friday and plans to avoid malls this season. Instead of buying gifts, her holiday budget will go toward supplies to create personalized framed photos, poetry, baked goods and other homemade gifts. She also plans to cook dinner for some friends.

The approach has helped her understand the holiday season is more than just a shopping spree, Eleuterio said.

There's something much more to the meaning of the holiday, she said, "and if you're not just spending money the whole time, you get to actually see it."