Happy Holidays on a Budget

The holiday season brings a blizzard of temptations and guilt trips that can lead to out-of-control spending on gifts. And that often leads to a post-holiday hangover in the form of credit-card debt. According to the National Retail Federation, in 2008 the average holiday shopper spent more than $900, and about one-third of shoppers used credit as their primary method of payment.

It’s wonderful to be in the spirit of giving, of course, but think it through before you go gift-wild at the mall. Buying even modest gifts for a long list of friends and relatives will add up fast. And remind yourself, the holidays are not just about presents.

Best advice: Batten down the hatches and spend less this year -- preferably with money you already have. Use these suggestions as inspiration to create a more frugal -- but just as happy -- holiday.

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Make a budget, check it twice. People who have a written financial plan are 250% more likely to achieve their financial goals than those who don’t, according to SimpliFi, an online financial-planning service.

It sounds easy to look at your finances and set a reasonable spending ceiling, but many people need a little help. Using a budgeting Web site such as Mint.com, you will be able to track your purchases and see a realistic picture of what you are spending now. (As you budget for gifts, don’t forget to set aside money for travel and entertaining.) Mint’s colorful graphs and friendly reminders make budgeting a little less onerous.

Don’t gorge on credit. Some of us are known to pack on a few pounds during the holiday season, but keep your credit-card balances thin. “Allowing holiday shopping to put you into debt is just crazy all the way around,” says Mary Hunt, author of Debt-Proof Living.

Try paying this year with cash or your debit card. If you’re shopping online, be careful when using a debit card because the safeguards against fraud are not as bulletproof as they are for credit. Try eBillme.com, a service for making cash payments online. Provide your e-mail address and the service will send your shopping bill to your in-box. Then you can pay the bill using your bank’s online bill-payment system. You can choose to pay with eBillme at more than 800 online retailers.

You may have access to tools such as the new Blueprint feature on Chase cards. Blueprint can help you set repayment goals for the items you do pay for with credit, and map out just how long into the new year it will take you to pay off those bills. Other issuers, such as Wells Fargo and Discover, offer tools to categorize your purchases. Your Mint.com budget will also help you keep an eye on your balances.

Another way to rein in spending is to use a layaway program. Toys “R” Us introduced their Big Gift Layaway in mid October. Other department stores, including Marshalls, TJ Maxx, Sears and Kmart, also offer layaway programs.

Trim the list. Author Mary Hunt used to overspend on her children’s gifts. She stretched her budget and worried she was sending the wrong message to her kids. Now, everyone in her family gets to ask for just one thing. (She supplements her kids’ gift with a few other little surprises.) Setting the limit has kept gift-buying under control and sends a better message to her family. It has become a welcome tradition. “Especially in uncertain times like these, traditions like this are an anchor for families,” Hunt says.

For several years, East Lansing, Mich., resident Sheryl Knox and her family have been using Elfster.com, which helps organize Secret Santa-style exchanges. Each member of your family or group of friends can focus their gift-buying on just one person (instead of a gift for everyone in the bunch). Elfster will also keep track of your participants’ wish lists. “The site is great for doing the draw and making sure the matches get mixed up differently from year to year,” says Knox. And setting a spending limit, such as $50, keeps the stress and the materialism to a minimum.

Use technology to save. For clothing and accessories, tell ShopItToMe.com which brands, sizes and items you’re looking for. It will send you “Salemail” each week, on the days that you choose. And you can visit the site anytime to check the sales.

For other items, such as electronics, set up an alert at ZingSale.com. It will search for sales from the thousands of online merchants the site monitors and send you an e-mail when it finds a sale. Users can also specify the price they are willing to pay for stuff and receive e-mails when the price drops below that level. To gauge whether the deal is truly a good one, ZingSale can also display the 60-day price history of the item you’re looking for.

Find the deals. Sites that aggregate sale ads for several stores will save you time. For big shopping days, such as Black Friday (the day after Thanksgiving, which is November 27 this year), check out sites such as GottaDeal.com’s Black Friday page . Be sure to visit GottaDeal on Cyber Monday, too. Cyber Monday is the Monday following Thanksgiving (November 30 this year) and a big day for online discounts. According to the National Retail Federation, nearly 84% of online retailers held Cyber Monday promotions last year.

Look for savings coupons and shopping codes at sites such as RetailMeNot.com, which offers coupons from more than 40,000 stores.

When you shop online, watch shipping fees. Some sites offer free shipping all the time (Zappos.com, BlueNile.com), and others offer free shipping with strings attached, such as spending a certain amount before qualifying. Last year, nearly 80% of online retailers offered free shipping under certain conditions. You may be able to find free shipping codes that you enter when you check out by searching RetailMeNot or in the e-mail alerts that you set up.

Think outside the gift box. Consider trading in some things you don’t need to fortify your holiday budget. Gazelle.com buys old gadgets that you send in and even pays the shipping costs. Send the site your old cell phone and it will pay you via check, PayPal or even with an Amazon.com gift card.

Or give a gift that gives back. Some really cool gifts come with a tax deduction: Charitable gift cards let you give a prepaid card that recipients can designate for the charity of their choosing. For example, the Good Card, from Network for Good , costs $5 plus the donation amount. The recipient goes online to choose from the network’s 1.8 million charities. And you can deduct 100% of the amount on your taxes next year (if you itemize).

Heifer International has worked in more than 125 countries and helped more than 10.5 million impoverished families. Gifts from Heifer International include a Trio of Rabbits for $60, a Water Buffalo for $250 or Honeybees for $30. The recipients of your gift will get a card letting them know you’ve donated, say, a water buffalo in their name. You will receive a tax deduction for the gift if you itemize on your tax return.

Finally, consider giving of yourself. For only the cost of your time, you can spread some real holiday cheer. Consider replacing this year’s holiday dinner party with a trip to the local soup kitchen.