Tips to Reduce Holiday Spending Stress

As the world economy continues to evolve, some countries struggle mightily with inflation, unemployment and negative trade agreements. National credit ratings have been downgraded around the world, and only a few countries have maintained their pre-crash levels. Unfortunately, each nation's citizens – consumers – stagger under the weight of the financial continuing financial crunch: Unemployment vacillates, wages freeze or fall and spending plateaus. Considering an estimated 32 percent of US consumers pay major monthly bills with credit cards and not from savings, how might this available-money squeeze impact holiday spending?

Merchant Sales Timing
The winter holiday season is traditionally the most important to retailers in most parts of the world: Sales may slow during other seasons, but the merchants need the winter holiday proceeds to maintain the financial health of the stores during those slow-down times.
Consumer sales during the winter holiday seasons of past years have lessened for many years, and most of those sales are made via credit card purchases, whether through an online retail outlet or a brick-and-mortar store.
To compensate for a projected less-than-stellar holiday sales season, more retailers are breaking out the holiday decorations early: Roughly 8 percent of major retailers nationally have tinsel and garlands already hung. No longer is the US holiday of Thanksgiving, the fourth Thursday of November each year, the starting point for the winter holiday shopping.

Consumer Purchasing
Lower wages or income, stressed employment situations and rising costs of health benefit, fuel, grocery and utility payments stretch a great many household budgets to the breaking point. Because non-living expenses, such as student loans, car loans, entertainment expenses and even car insurance, for example, are lower priorities on expense lists than rent, mortgage loans, groceries or other miscellaneous expenses, those items are usually pegged for payment via credit cards.
Consumers have spent less for holiday gifts during the last four years, and merchants are nearly desperate for ways to improve projected profits. With personal expenses loaded onto credit card payments, and merchants rely so heavily on that mode of payment, how might the demand support the supply?

Budgetary Restraint
A two-edged sword, as employers have reduced expenses by releasing workers or sending manufacturing overseas. Stores are relying more toward online retail websites, reducing brick-and-mortar expenses. Sales start earlier and extend longer than historical guidelines.
Consumers have also created budgets and try hard to maintain them to accommodate reduced income. However, true savings isn't simply meeting a budget. Budgets monitor spending -- not savings.
As employers have reduced expenses, so must consumers, and much of that expense reduction comes from reduced credit card debt.
First, devise a comprehensive budget that is honest, realistic and adjustable. Identify where you can shave even pennies reliably. Then cut the maximum allowed on everything possible by 5 to 10 percent. Then reevaluate your budget.

A budget is intended to keep your spending consistent. Living below your budget limits is the key to sound financial management: Pay off interest-bearing loans and revolving credit lines. Cut the number of cards you actively use. Use alternate energy sources. Buy more generic foods, or buy in bulk instead of the per-serving items.
Use cash for purchases instead of credit cards. Debit cards are also better than credit card purchases.
If you have credit cards with balances, above all, pay at least the minimum due each month: Don't risk a declination of your credit rating, for it's far harder to repair that than it is to buy a cheaper fuel or food for a few months, for example.
Start now – before you start the bulk of your holiday shopping – and enjoy a smoother, less stressful spending spree later.

By Jaye Ryan, a freelance author who likes writing  about budget and money management tips for Octopus Loans.

Photo By krejcirikmira on Flickr License By  http://creativecommons.org/licenses/by/2.0/deed.en