Black Friday and Cyber Monday Mean Only One Thing: It's Time for the Holiday Budget!

Well, its that time of year again. It's time to rush out to the stores (or click that mouse) and buy $400 laptops, $600 LCD TVs, and $100 GPS devices. Of course, those are money losing propositions for the stores (and sleep losing for you if you were one of the people standing in line at 4 AM), but the stores are counting on the increased foot traffic from everybody else who oversleeps and misses those deals to more than make up the difference. In order to not fall victim to the stores around the holidays it is critical that you go in with a clear battle plan: a holiday budget.

The concept of the holiday budget is pretty simple. Start with a total over-arching amount you are willing to spend on gifts. Set out a list of people that you need to buy for. Preferably ask those people for a list of what they would like. Match their lists to your list and budget. Presto! You have achieved holiday budget feng shui. The key here is having a plan and not just window shopping your way through your list as you will inevitably: a) spend more than you think b) buy someone two presents, and/or c) forget someone you should have remembered. If you have a plan and stick to it you will not have any of these problems.

Once you are done with this year's shopping remember how much you spent in aggregate. Then save that number divided by 12 each month next year to build up your "holiday buffer" so you don't have a nasty surprise around the holidays. It's a little like the elves building toys in Santa's workshop all year long. If they tried to build the toys of all those girls and boys in the last month of the year they would never get it all done. They have to build them a little at a time all year long. You too should save a little each month to build up that holiday shopping buffer. The exact wrong thing to do is rack up a big credit card bill at the end of the year and then spend many months and additional dollars paying it off. Trust me, your kids, family, and friends don't want you to be in that situation and neither do you. Plan ahead and avoid that trap. Credit card debt is bad debt, avoid it at all costs especially around the holidays. Your holiday budget and (next year) your holiday buffer should help you avoid the kind of credit card debt that will inspire Santa to put coal in your stocking.