The American Consumer Credit Council says the average American spends $935 on holiday gifts. This is about $300 more than they said they planned to spend, according to another study by the American Research Group. In 2011, according to that study, Americans planned to spend an average of $646 on Christmas presents.

Do you begin every holiday season vowing not to increase your debt, but end up whipping out your credit card when cash runs low? Every January 1, do you make a resolution to start a holiday savings account… and then add it to the list of broken New Year’s resolutions by mid-February? I can sympathize. But this easy five-step plan can help you (and your credit cards) escape the holiday season unscathed, even if you haven’t put aside a penny for gifts yet.

1. Set Your Budget

Realistically, how much money can you set aside for the holidays between now and December 24? Right now, there’s about six weeks until Christmas. Can you set aside $100 per paycheck? $200? More? Include any bonuses you might receive, money you’ve already saved for holiday spending, and even credit card rewards points you can redeem for gift cards. Doesn’t seem like enough? Look at other places you can cut costs for the next few weeks, including bringing lunch instead of eating out or reducing your grocery bills temporarily. Who knows? You might even get used to this new frugal lifestyle and be able to save some money year-round.

2. Make A List

First, make a list of everyone you have to buy for… don’t forget holiday tips, teachers, and your office secret Santa. Then add expenses that come up every year, like Christmas parties (where you may need to bring a small gift for the hostess), entertaining you might do in your own home, Christmas Eve and Christmas day meals, and buying a Christmas tree.

3. Check It Twice

First, put a dollar limit on each person or expense, based on the amount of money you have to spend. Can’t make it work? It’s time to start reducing the list. Can you agree not to exchange with certain friends this year? Skip gifts for cousins you rarely see? Do you need to give cash tips to everyone you do business with? If you have more than one child, teacher and bus driver gifts really add up. Reduce the list to the bare essentials; give homemade cookies in decorative tins to everyone else. If holiday parties are eating up a portion of your budget, consider choosing just one event to attend this year. Reducing your schedule might also make your holidays less stressful!

4.Start Shopping Smart

Buy one get one free sales are a great way to double up your gift giving power, and also save time with your shopping. But be careful about sales designed to entice you to spend more in the long run. An American Research Group study said that shoppers who planned to look for sales planned to spend an average of $10 more, total, than shoppers intending to pay full price.

Finally, leave your credit cards at home. While it can be smart to leverage your credit card rewards for holiday shopping, if you have a problem with spending or tend to go in to debt over the holidays, it’s best to put your cards on ice, as they say. And definitely say “no” to credit card offers at the cash register.

5. Track Everything

Sometimes, you’ll find the perfect gift for less than you budgeted. That’s okay! Buying last minute “add-ons” to reach an arbitrary dollar amount can blow your budget. This could be why people who start shopping after November 20 spend 9% less than the average holiday shopper, according to American Research Group.

Staying under budget for some gifts allows you to take the money you saved and put it toward that “hard-to-buy-for” friend or family member. In all the mayhem of gift opening, no one knows how much anyone really spent, and they shouldn’t care either!

Remember, the holidays are not about who can pile the most presents beneath the tree. It’s about spending time with loved ones and being grateful for what we have. Especially in hard times, it really is the thought that counts.


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