by Russell Dawson

Created on: December 12, 2006   Last Updated: January 08, 2008

Those of us who are accustomed to giving during the holidays can end up racking up startlingly large debts. And too soon after the stockings and mistletoe are put away, we are left holding the proverbial bag (of credit card bills). What's worse is that many workers experience a drop off in earnings when a number of sectors in the economy slow down for the first quarter of the new year. This can leave the best of us feeling stretched, squeezed and pinched all at the same time.

When trying to slay the January debt dragon, the best offense is a strong defense. The most effective way to avoid having to overcome a horrifyingly large post-holiday debt is to keep it under control in the first place. Here are some tips that can help get a better start financially to the new year.

1) Reconsider your shopping list. Buying for everyone you know becomes more and more difficult each year, particularly when your friends or family start having children. Between my two siblings and myself, we went from 0 to 8 children in about 5 years. Initially, we did a draw so that each child bought for one cousin. This cut the number of gifts required in half. After a couple more years we decided to stop exchanging entirely. The result: the children still received so many gifts from "Santa," their parents and grandparents that they haven't even noticed.

2) Consider making a cash donation to a child's RESP. Too often children play with a $20-40 dollar toy for a few days and then set it aside for good. Offering to donate to the child's RESP allows you to stay right on budget and eliminates wrapping and shipping charges. Since the government (in Canada anyway) will top up the donation to an officially registered RESP by 20% and that the money will grow untaxed until withdrawn, your donation should be worth about 5 times as much when the child heads to college.

3) Recognize that Christmas spending is an annual expense. Very recent information in Canada pegs average household spending at about $900 on Christmas gifts. This means that we need to tuck $75 away each month for Christmas in order eliminate those unwelcome bills in January. If, like me, you are unlikely to let a little nest egg build unmolested, you can spend $75 per month on gifts and store them until the holiday. This will allow you to find some terrific deals too.

4) It's been said before but is well worth repeating: Make a list. If you set amounts for each person that you can not go over, you'll know exactly how much you are on the

• 1
• 2
• Next Page >>