Financial Education

Make room for the holidays in your budget

The holiday season is approaching and, if you're like most Americans, you haven't even started to think about what to get friends and family. And given current economic conditions you might need additional funds to make the season bright, but without ruining your budget.

So what do you do? Consider the following suggestions, all of which can help you get what you need while maintaining fiscal sanity.

The Internet
Sites like Amazon and Craig's List are well-known and provide great ways to save money. But there are a few other sites out there that can save you even more.

Freecycle.org—The premise is simple: create a site where people from around the country can list items they no longer want and are willing to get rid of for free. The way it works is also relatively simple: go to www.freecycle.org and enter your city and state. A list of local Freecycle groups will appear with links to their group site (usually hosted on Yahoo.com, or other free hosting service). Just click the link, start shopping and sign up if you find what you want.

Fatwallet.com—This is a coupon and rebate site that may even give you money back for online purchases (some restrictions and rules apply). It's completely free to join and has active forums where users share information about online deals and other saving tips.

Stoorz.com—Another online coupon site, Stoorz offers you savings on everything from computers, to clothing, to travel. Unlike the previous two sites, this one requires no registration. Just click on the links they provide, or enter the coupon code.

As with any online purchase, remember to keep your privacy in mind and make sure the site is secure (as indicated by a yellow padlock). And as usual, if something doesn't seem right, trust your instincts.

Thrift stores
While the quality of items at thrift stores can vary greatly from store to store—and even day to day—they are a fantastic way of not only saving money, but also giving back to the community since most are run by non-profits such as Goodwill or Disabled Veterans of America.

There are a few keys to shopping at a thrift store:

Be flexible—It can sometimes be difficult to find one precise thing since their inventory is dependent on what people donate. But if you have a general idea of what you're looking for (e.g. a book or DVD), or are just willing to look around until something catches your eye, you'll have more success.

Be patient—The best way to shop a thrift store is to do so repeatedly. Going once, or even a few times, a week can greatly increase your chances of finding what you want.

Be open minded—Some people may think shopping at such a store is beneath them. But why pay $50 for something you can get used for $5? They are also especially good for finding children's items because kids don't have a concept of what something is worth. For them, the toy dump truck you picked up for $1 at the Goodwill store is just as good as the $25 one found at a big box store.

Financing
In a perfect world, you would pay cash for all your purchases. And given how tight banks and credit card companies have been with credit due to the subprime mortgage and banking crises, it may be difficult to get financing, even for those with near-perfect credit. If you absolutely need extra money, the following options have both their positives and negatives.

No-interest offers—Some retailers are eager for business and offer no-interest financing on purchases. While conditions may apply (such as minimum purchase amounts and when they need to be paid off) they can be a good way to buy a more expensive item without interest charges. But be careful—if you don't pay the item in full by the specified date, you can get hit with a huge charge.

Credit cards—They are quick, easy to use, and accepted pretty much everywhere. The problem? They can take years to pay off, especially if you only make minimum payments. There's also the issue of maxing out your cards in the current economy—if you do so, and don't have an emergency savings account set up, then you may find it impossible to pay for car repairs or any other financial surprise.

Traditional loan—The advantage of a traditional loan is that you can use the money not just for shopping, but also to reduce overall debt in the process. In addition, your interest rate and payment will never change, and you'll know exactly what your loan will cost and when it will be paid off. The disadvantage is that the monthly payments tend to be higher than those of a minimum credit card payment. Factor in the total amount of interest, however, and the loan winds up costing less in the long run.

You can compare the costs of any of these types of financing on our financial calculators page.

When all else fails
If none of these are options for you, there are still a few other things to try.

Ask for a discount—Being a service member or military spouse can lead to 10 to 30 percent off the total, but you won't know if you don't ask.

A group gift—Having friends and family pitch in for a larger gift allows everyone to buy something they couldn't afford by themselves. It can also eliminate the need to buy several smaller gifts.

Other options—There are many gifts you can give that cost little to nothing. Offering to paint or do yard work for an older family member, having children make something for a grandparent, or a special night out for a spouse are ways you can make someone's holidays special without spending anything more than time.

The old adage of "It's not the gift but the thought that counts" may seem cliché, but it's the attitude you need to have when money is tight. Very few people will be disappointed with a gift that is thoughtful, no matter how much it costs.

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