It's a holiday tradition: playing tug-of-war with ourselves over what we want to spend, and what we can afford to spend, on gifts for our loved ones.
One-third of military families cut back on holiday spending in the past year, according to a September survey sponsored by First Command Financial Planning. This is the second year the company has hired market research firm Sentient Decision Science, which specializes in the financial services industry, to look at trends in financial behaviors, attitudes and intentions.
Each month, Sentient surveys a random sampling of about 1,000 U.S. consumers ages 25 to 70 with household incomes of at least $50,000. Sentient also surveys a random sample of about 400 military consumers within the same parameters twice a year, in March and September.
The latest survey shows that military families also have cut back in other ways 36 percent said they used cash or debit cards instead of credit; and 17 percent said they had cut up credit cards.
When it comes to credit, there's no more important time to be careful, with a new credit card law taking effect in February.
In anticipation of the new law's consumer protections, many financial institutions are tightening up on credit. If you bump up against your credit limit or can't pay your bills your credit card limit could be abruptly reduced, or your interest rate could be increased.
Some military families already have felt this. In the September survey, 12 percent said their credit limit has been reduced; 8 percent said they have been rejected for a credit card; and 11 percent said they'd had difficulty paying bills in the past year.
It's easy to spin out of control when you're trying to rein in your spending during the holidays. Some tips for staying on track:
Instead of spending money on a gift, use your time and talents. Write a letter to a loved one describing your favorite memory of him or her, or print out a favorite photo and put it in an inexpensive frame. Knit or crochet a scarf.
Decide how much you can spend during the holidays including gifts, travel, wrapping and entertainment then keep track and stick to it.
Go shopping with only as much cash as you can comfortably spend; leave credit cards at home.
Check ads and discounts in newspapers and online to search out the best buys. If you can shop online, you'll surely save time and you might save money.
True friends and loved ones don't want you to put yourself in financial distress just to buy them gifts. And if someone doesn't care about your financial health, should you even be buying him a gift?