The 13 worst holiday spending blunders

By MP Dunleavey

The official Holiday Spending Season is upon us. Are you feeling the pressure?

Some of us felt the squeeze as early as the day after Christmas last year, when stores had their 75%-off sales and we felt compelled to buy gifts a year in advance. Not that we'd admit that in public. Yes, pressure makes you do strange things, and let's face it, we've all done very strange things under the influence of holiday gift-giving angst.

I speak from personal experience. For years, I think I believed that I should buy whatever struck me as the most perfect present for someone (i.e. everyone) and Santa would reimburse me afterward. Either that or I thought that somehow holiday money flowed from a separate, more abundant source than everyday cash.

So think of this as the holiday equivalent of a tornado alert. No, you don't have to hide in the basement (although some people do). Just stay calm, cultivate a rational approach as the high-pressure front moves in -- and keep reading.

Don't underestimate what you spend

Barbara Steinmetz, president of Steinmetz Financial Planning in Burlingame, Calif., is quite familiar with watching her Silicon Valley clientele get into hot water around the holidays. "The more money you have, the less you keep track of it," she notes.

• Tell us: Can you really do Christmas cheaply?

While most of us don't have that problem, Steinmetz says many people seem to have temporary financial blindness when the time comes to purchase presents. She asks her clients to estimate what they spend every year on all their gifts, including weddings, anniversaries, birthdays, graduations, baby gifts and the like. "They usually say between $1,000 and $4,000 a year, which tells me they have no idea what they really spend," she says.

Did you ever stop and add it all up? Sally's bridal shower, Dad's 70th birthday and so on? Neither did I.

Steinmetz says that's why so many of us get into spending trouble over the holidays: "The biggest problem with holiday gift giving is a massive misconception of how much you're spending."

So it may seem too basic to bother with, but sit down now and draw up a holiday budget -- yes, right now. This helps for two reasons:

• It will give you some perspective on what you think you spend versus what you actually do.

• You can panic now before you actually go out and spend the cash.

But even careful spenders can find themselves in post-holiday hell when the January credit-card bills roll in. The holidays are an emotional minefield, and one misstep can blow your budget to smithereens. After months of careful research, calling all our relatives, we've identified the most insidious blunders so that you can venture forth into the malls forearmed.

Guilty gaffes

Not surprisingly, guilt seems to be the biggest source of overspending.

• Homemade gift guilt: Take the year my Aunt Ginny decided to make everyone a special basket, packed with treats she'd made herself: "Oranges with cloves, homemade flavored coffee, my own home-baked cookies -- even homemade dog biscuits." Then, because she felt like it wasn't enough, she went out and bought everyone a "real" present. "I was crazy that year," she says.

• Equalizing to excess: You get each of your kids (or parents or siblings) an equal distribution of presents. Except . . . maybe you should get Mom a couple of extra little things because Dad's cashmere sweater obviously cost a bundle. But now Mom has three presents and Dad has only one, so the least you can do is get him a book . . . repeat until broke.

• Surprise-gift guilt: Your boss, friend, co-worker or neighbor gives you an unanticipated gift. D'oh! You should have anticipated this! You dash out to the store and add yet another item to your overwhelmed holiday budget.

• Reciprocal retaliation: This game is deadly and has a way of snowballing before you realize it. Three years ago, you and your mate gave a couple of your friends a dinky coupon for a free night of baby-sitting. They gave you pricey Broadway tickets. The second year, you ramped up and took them out for a swell dinner. They gave you a case of wine. This year, you just want to win, so you're planning to give them an all-expense paid trip to Guadalajara -- just so they'll back down, and next year maybe you can get back to giving baby-sitting coupons. Won't happen.

• Rejection rebound: In order to save money, you gave someone a gift that you got from someone else, forgetting it was the recipient who gave it to you last year. To make up for this offense, you overcompensate, now and possibly for years to come.

Continued: Procrastination problems

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