During the holiday season, many gifts will be exchanged, many holiday meals will be prepared and many miles will be traveled by those seeking to unite with loved ones.

As a result, many a family will feel the pinch of holiday purchasing. At the root of post-holiday debt is lack of planning.

Preparing for the holidays should be a year-round task. If we don't do prior planning, we eliminate some of our buying options. This can lead to other spending mistakes.

Without proper planning, we will resort to overusing credit or robbing our monthly budget dollars. These are serious mistakes because we can disrupt or destroy our overall budget.

Families spend an average of $750 for gift buying during the season. That is a major outlay of resources and requires proper budgeting.

Without a holiday budget, we tend not to set limits. There are so many costs associated with the holidays, and not all of them involve gifts. Costs for food, decorations, travel, and even greeting cards can quickly add up.

We recommend to our clients that purchases should be spread out over the entire year. It's important not to concentrate your spending around the holidays. If you buy one gift a month, you can spread out your holiday stress and make bills more manageable.

If the tips and reminders above have arrived too late for Holiday Season 2005, there's still light at the end of the tunnel. For those who face the prospect of post-holiday debt, we have the following suggestions:

Size Up your Financial Situation

The first step is to sit down and look at where you are financially and begin to plan for next year. Determine your spending habits and where your money is going in order to plug future holiday spending leaks. Once you estimate your holiday spending, include this figure in a year-round budget.

Consolidate Credit Bills

If you end up with huge credit expenses after the holidays, look at consolidating your bills into a lower interest credit source.

Power Pay your Way Out

If you're faced with several bills, fix all of your debt payments on the minimum. Then focus on one, preferably the smallest, and add any extra money you have until you pay it off. Once that debt is resolved, roll your payment from the paid debt onto the minimum due on the next debt. This is called "stacking." Also, while you're concentrating on one debt, it's OK to make minimum payments on the others. Making minimum payments will certainly be satisfactory for your creditor and will keep you in good credit standing.

Develop "Extra" Cash

Here is a good way to develop "extra cash" for debt repayment: Have a "nothing" week or month. Set aside a period of a week or a month during which you refrain from nonessential purchasing. The money saved from these periods can help reduce holiday debt.

These strategies have been used successfully by many families who have gone overboard with holiday spending, but the typical consumer skills that should be used year-round definitely apply during the holidays.


Arif Halaby is the president of Total Financial Solutions. Mike Finder is the vice president of Total Financial Solutions. Your questions, comments and suggestions can be e-mailed to ahalaby@tfswealth.com. Include "Inside SCV" in the subject line.