13 Ways to Waste Money During the Holidays

Not Setting a Budget

To avoid overspending and racking up debt, it's imperative to create a realistic budget to which you can actually adhere. Take the time to make a gift list with a dollar amount you can afford to spend on each item. Because most people tend to buy things for themselves while doing their holiday shopping, you should factor a gift for yourself into your budget, says Trae Bodge, senior editor at coupon and deal site RetailMeNot.com. And don't forget to write down all the extra things you'll be paying for -- such as the restaurant meals you'll eat while out shopping, ingredients for holiday goodies that you'll make for friends and family, postage for holiday cards, cab rides home from holiday parties, and the list goes on.

One way to stick to a holiday budget is to put cash in envelopes designated for certain expenses. You'll know you've reached your spending limit when the cash from the envelope is gone.

Shopping at the Wrong Times

Black Friday is synonymous with deals, but not everything goes on sale the day after Thanksgiving. For starters, some of the best deals can be found during sales before and on Thanksgiving. And you won't find deep discounts on several items until after the holidays -- such as brand-name big-screen TVs, which usually are marked down to their lowest prices in January before the Super Bowl.

See Best Times to Buy Big-Ticket Items to learn more about timing your purchases to get the best prices.

Not Comparing Prices

There are plenty of sales around the holidays, but not every deal is actually a bargain. Make sure you compare prices before you make any purchases to find the best deal and avoid spending more than you have to on gifts. Sites such as PriceGrabber.com and the browser add-on PriceBlink make it easy to find the lowest prices for the items on your gift list. For more resources to help you get the best prices, see 15 Web Sites for Finding Deals Online.

Racking Up a Credit-Card Balance

You might think you're saving money by buying all your gifts and holiday items on sale. But if you charge everything to a credit card and don't pay off the balance, those savings can easily be erased by the interest you'll pay. The Credit.com Credit Card Payoff Calculator can help you figure out what the real cost of carrying a credit-card balance is.

Using Layaway

Layaway allows customers to select items they want and pay for them over a period of time. Once final payments are made, items may be picked up. This method of payment can be a good option for consumers who would otherwise use a credit card and not pay off the balance quickly (thus accruing interest).

However, there are several reasons layaway can be a money waster, such as the fees you'll have to pay. Retailers charge a cancellation fee, ranging from $5 to $15, if you decide not to go through with your layaway purchase. Add this to the nonrefundable $5 service or initiation fee some charge, and you've lost up to $20. Plus, many retailers don't allow price adjustments if items go on sale after you put them on layaway -- so you miss out on a lower price.

Paying Too Much for Shipping

If you plan to do your shopping online, you often can avoid paying for shipping by having your purchases shipped to a retailer's brick-and-mortar store or by taking advantage of free shipping promotions. You can find free shipping codes at FreeShipping.org, or you can take advantage of Free Shipping Day on December 16, when hundreds of merchants will offer free shipping on all purchases with guaranteed delivery by Christmas Eve. Visit freeshippingday.com for a list of participating retailers

You also don't want to pay too much for shipping boxes of hand-assembled gifts to friends and family. Get your gifts together early, and you'll pay the U.S. Postal Service's flat rate of $12.65 to ship a medium-sized flat-rate box by priority mail -- compared to $44.95 for a flat-rate next-day express box for people who wait until the very last minute.

Not Keeping an Eye On Your Airfare After You Buy

You can get most airlines and online travel agencies to give you a rebate -- usually in travel credits or vouchers -- if your flight’s price drops below what you paid, but you have to ask for it. Yapta.com will send you alerts if the price drops on a flight you've booked. Be aware, though, that some airlines can charge hefty fees for re-booking your flight. If the fee outweighs your rebate, it's not worth it to make a change.

If you plan to stay in a hotel over the holidays, you can book your room using Tingo, which will automatically re-book your room at a lower rate if the hotel drops its price. Then you'll get a refund for the difference.

For more ways to save on your trip, see these 26 secrets to save on travel and the 20 best travel sites to save you money.

Exceeding Your Charitable Giving Budget

If you stuff a few dollars into the Salvation Army pot every time you go to a store or say yes to every colleague who is collecting money at the office for a special cause, your generosity could easily break your budget. Make a plan for your seasonal giving: Identify specific organizations that you care about, and allocate appropriate funds for them. Leave room in your budget for some discretionary donations, and be prepared to confidently and politely decline some requests once you've reached your limit. See Make the Most of Your Charitable Giving for more advice on how your donations can have the most impact.

Be especially wary of e-mail and telephone solicitations because they could be scams (see How to Avoid Charity Scams).

Going Overboard with Holiday Decorations

Last year, the average American was projected to spend about $54 on holiday decorations, according to the National Retail Federation. And your electric bill can jump as much as $80 a month if you light up the neighborhood with an elaborate outdoor display, according to Duke Energy.

You can easily make your home look festive without spending big bucks on a light display and racking up a huge electric bill. Try the natural approach, instead -- fresh greenery collected for free from your yard or a friend's yard.

Buying Bad Gifts

Don't waste your money on gifts that no one wants, such as useless gadgets, tacky Christmas apparel or the infamous fruit cake. Instead, buy a gift card if you don't know exactly what to give someone on your list. Opt for all-purpose cards, such as an American Express or Visa gift card, rather than store-specific -- unless you know the person's favorite store. In that case, don't pay full price for a gift card. Visit sites such as Cardpool and Gift Card Granny for discounted cards.

If you're unsure of what makes a bad gift, check out these seven reasons why your gift may be returned.

Shopping at the Wrong Store

Sure, it’s convenient to get all of your holiday supplies at the same place. But if you buy your baking supplies, gift wrap and paper table settings at the same store, you’re probably spending more than you have to on many items in your shopping cart.

For example, you’ll get the best deal on cleaning supplies, greeting cards, gift wrap and bags at dollar stores. You can get a gallon of regular milk for 50 cents to 60 cents less at the supermarket than at a warehouse club, and higher-end grocers, such as Whole Foods and Trader Joe’s, tend to have the lowest prices on organic, almond, soy and other specialty milks. You’ll save nearly 70% per unit on batteries for all those kids' toys if you buy them in bulk at a warehouse club rather than the drugstore. For more tips, see Best and Worst Buys at Warehouse Clubs for the Holidays, What to Buy at Dollar Stores for the Holidays and Ways to Save Money On Groceries Without Coupons.

Not Adjusting the Thermostat

Don’t waste money heating your empty house or apartment while you're off on vacation. When you leave for the holiday (or even the day), lower your thermostat by several degrees. You can save 5% to 15% (about $180 a year) by adjusting your thermostat 10 degrees to 15 degrees for eight hours, according to the U.S. Department of Energy. A programmable thermostat makes setting your home’s temperature easy.

Paying for Warranties

When saving big on doorbuster electronics, don’t give back your savings to pay for unnecessary warranties. Appliance and electronics salespeople will sell you on a product's merits and, after you commit, badmouth it so you'll also buy a service contract. Don't bite. Thirty-one percent of consumers buy extended warranties each year, according to a study by the University of Maryland’s Robert H. Smith School of Business. Typically, you'll pay 10% to 20% more for an item to extend a one-year manufacturer's warranty through the fifth year of ownership, according to the Service Contract Industry Council.

Odds are you won’t need the extra coverage because most major appliances don’t break down during the extended-warranty period. Or you might already be covered. The four major credit card networks -- Visa, MasterCard, Discover and American Express -- provide up to a year of extended warranty protection for some cardholders, according to credit card comparison site CardHub.com.

Speaking of credit cards, they come with a number of other valuable perks. Make sure you aren't overlooking them.