Money Coach: Don't Break The Bank This Holiday Season

The holiday season is almost upon us and for many Americans that means it's time to go shopping! But with the sluggish economy, the risk of over-spending on gifts is a big concern for many people. Host Allison Keyes gets some tips on how to make the holiday special without breaking the bank, from regular Tell Me More contributor and personal finance expert Alvin Hall and Washington Post personal finance reporter Nancy Trejos.

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ALLISON KEYES, host:

I'm Allison Keyes, and this is TELL ME MORE from NPR News.

Coming up, one girl's remarkable struggle for an education from a village in Kenya where her parents arranged a marriage at age five, to post-graduate studies at an American university.

But first, we're entering the holiday season. Black Friday is just ahead and as you know, retailers won't let us forget it.

(Soundbite of ads)

Unidentified Man #1: For the first time ever, Hhgregg opens Friday at 4 a.m.

Unidentified Man #2: OK, New York, let's talk turkey. J and R's Black Friday sale features the biggest deals of the year...

Unidentified Man #3: And this is Bob's Black Friday sale. Doors open at 8 a.m.

Unidentified Woman #1: I've worked all year for one day, this Friday.

KEYES: OK, I'm not running for my car yet, but some major retailers have already fired up their Black Friday sales, the ones that traditionally happen the day after Thanksgiving. But what if you're broke or if you're one of the 10 percent of Americans who are unemployed? What to do about gifts? It's a question we're posing in our weekly money coach segment.

Joining us is Nancy Trejos, author of the book "Hot (Broke) Messes: How to Have Your Latte and Drink It Too." She's a financial reporter with The Washington Post and is right here in our Washington studios. Also with us is our regular financial contributor Alvin Hall. Welcome back.

ALVIN HALL: Thank you. Glad to be here.

Ms. NANCY TREJOS (Author, "Hot (Broke) Messes: How to Have Your Latte and Drink It Too"): Thank you.

KEYES: So there's a new survey out that says consumers plan to spend more this year than last. But Alvin, some people think that folks are too focused on showing off all their money during the holidays. Do you?

HALL: I think people often are because the holidays are a time to show how much you love someone. So it comes filled with this expectation. And if you don't spend the right amount of money, you don't get the right gift, do you really love that person?

People need to refocus on what is actually the underlying reason for these holidays? And it's about getting together in the family, not about the amount of money that you spend.

KEYES: So do you think people are going overboard always?

HALL: I think sometimes people go overboard, especially during times of prosperity, during times like we have today. Some people will go out and just say, oh, I'm just going to buy it because I'll make it work later on. You need to come up with a plan before you walk into that door. You know, there's that old myth, that old Greek story about Scylla and Charybdis as they, you know, lured - what is that?

KEYES: Odysseus.

(Soundbite of laughter)

HALL: Odysseus to his grave. You know, I wish it - that's what those (unintelligible) alike.

KEYES: Well, now that we're back from the Greek mythology...

(Soundbite of laughter)

KEYES: How do you reign it all in? I mean if you're friend needs some $150 pumps from Nordstrom, do you get them for her?

Ms. TREJOS: No. I think you need to be honest with your friends and your family about your financial situation. And you need to tell them, you know, if you're short on cash, you need to let them know. And if they love you they'll understand that.

KEYES: Well, doesn't pride, though, get in the way of shopping? I know people that are saying, well, I don't really have any money right now, but you can't be showing up with the cheap, fake crystal glasses.

(Soundbite of laughter)

KEYES: Wait, well, actually, I want to ask both of you, Nancy, has pride been an issue for you?

Ms. TREJOS: Oh, it's been an issue in the past. But, you know, I had to learn the hard way. I had financial issues and I had to get a financial planner and fix myself. And my planner said, look, just be honest with your relatives. And I was. I told my parents, look, I'm sorry, I can't buy you an expensive gift this year, and they were totally fine with it.

KEYES: Alvin, what about you? Pride issues for men shopping as well?

HALL: Not so much for me because I'm a real bargain hunter. I make up a list starting in October. And I put an amount that I'm willing to spend next to everybody's name. And then I hope that the, you know, divine intervention of the sales gods will enter my life. I'll be able to buy 40 or - exactly.

(Soundbite of laughter)

KEYES: Or God.

HALL: Or 50 percent off. So I'm always trying to come in, actually, at about 25 percent under my budget because I think as long as the gift is creative and it's something that the person would reasonably like or be happy with, you're OK.

KEYES: Well, some people, though, feel compelled to get a particular gift, Alvin. I mean, what if your sister's, like, I need to have this designer wallet. And you don't have the money. Is there a way to get around that than just saying no?

HALL: Yes. You can say, I don't think I have the money this year and I think maybe if you really want that, maybe the rest of the family can pull the money together and contribute. If that one thing will make you the happiest, we'll do that. But that will be the only gift you will get. And I do that with several people where the gift is at the edge of unreasonable.

(Soundbite of laughter)

KEYES: If you're just joining us, this is TELL ME MORE from NPR News. We are talking to Alvin Hall and Nancy Trejos about managing your money during the holiday season and avoiding drama.

I've got to ask both of you, Nancy first, is doing all your shopping by credit card at this time of year a good choice?

Ms. TREJOS: No. Pay cash.

(Soundbite of laughter)

Ms. TREJOS: Do not use your credit card around this time of year. Don't use credit card to buy any gifts. Use cash.

KEYES: Alvin?

HALL: Well, I do use my credit cards because I love those air miles.

(Soundbite of laughter)

HALL: I do love those air miles. And for me, because I'm really disciplined about this, and I already have the money in the bank before I even go shopping for those gifts, those air miles enable me to make my money work twice for me. So I'm able to use those miles later on in the year to do something I really want to do.

But if you're really in financial difficulties, Nancy is absolutely right. If you don't have the money or you're nervous about or you don't have the self-discipline, do not walk into a store with a credit card because it will just lure you to temptation.

KEYES: I can hear my purse closing right now.

(Soundbite of laughter)

HALL: I can hear that old minister in my Baptist church going yield not to temptation. Do not yield.

KEYES: But, Alvin, what about the midnight sales and those online bargains? Is some of that worth it?

HALL: Sometimes if you need the item that you're buying, if you're looking for a flat screen television or one of those gifts that was featured on Oprah's favorite things on sale and you need it, then you can get it.

(Soundbite of laughter)

HALL: But don't go in with this, I'm just going to see what's great. Because as soon as you start just looking, everything looks great.

KEYES: Go ahead.

Ms. TREJOS: I think the online shopping can be good. You can find some good deals online. There are lots of websites like shopittome.com where you can find sales.

HALL: Yes.

Ms. TREJOS: You can look for coupon codes. So it can be a good option for a lot of people.

KEYES: But are you more impulsive online, I mean, looking at it on the shiny computer screen, you can turn the picture around, you know.

Ms. TREJOS: That's the thing, like, you have to come up with a plan. You have to decide exactly who you're going to buy gifts for and exactly how much you're going to spend on everyone.

HALL: And, also, Nancy is right in that when you're sitting there alone, you're by yourself. There's no one to say, maybe you shouldn't do that. And you become quickly self-justifying. It starts to feel better and better and all of a sudden you've clicked it and bought it.

KEYES: That's how you end up with those cards out of the Neiman Marcus catalogue.

HALL: Exactly.

(Soundbite of laughter)

KEYES: But, Alvin, the one budget buster we haven't talked about is the holiday dinner. I was talking to a guy yesterday who was at some fancy store buying the turkey injector, but it had to be gold and gold silverware. I mean that could have run into a lot of money, how do you not spend millions on your holiday feast?

HALL: Again, plan out the meal in advance and ask people to bring certain dishes. This year, I'm getting together with a friend of mine, Susan, and she asked me to bring this sweet potato dish that I've always made for years and years. So by sharing that responsibility, you divide up the expense among several people and it's less pressure on your budget.

So, plan it out and divide it up. And people love coming together and bringing their favorite dish, something they're really good at making. It helps them to buy into the holidays and feel they're actually making a contribution.

KEYES: Nancy, in your book you talked about living through some kind of tight financial times. And you had to do some creative gift giving, shall we say.

Ms. TREJOS: Yeah.

KEYES: Talk to us a little bit about that.

Ms. TREJOS: Well, you know, you don't have to give people, you know, that expensive pair of shoes. I mean, get creative. One year, I offered my sister my time. She has two kids. And I said, I will babysit so you and your husband can go out, and that's my gift to you. And she loved it.

KEYES: Nice.

Ms. TREJOS: Or if you have a, you know, if you're artistic, you know, you can paint something for someone. You know, use your talents in different ways.

KEYES: Alvin, what are the more creative things you've done? I know you've got some stories.

HALL: Oh, yes. Well, I have a friend who lives up in Connecticut. And she and her husband lost their job last year and they didn't have very much money at all. But they went out and baked lemon cakes for everybody. They were so delicious, I actually asked for the recipe and she sent me a second cake. It was that good. That's one way.

Another thing that I do, I go through my house and I think of things that people have always admired, things that maybe I'm tired of, things that I'm no longer interested in, and I'll give them something. So a couple of years ago, and this year...

KEYES: Wait a minute, you're a regifter?

Ms. TREJOS: Regifting.

HALL: No. Things people really admire. Absolutely. I had a beautiful, beautiful cashmere scarf that every time I wore this friend of mine said, he really loved that scarf. And I just packaged it up and gave it to him. He was so happy.

(Soundbite of laughter)

HALL: He said. Because it was really a gift of love. I said, I love that scarf, but you'll love it even more and it's your Christmas present this year. He was quite happy with it.

KEYES: I don't know, my grandma would tell you that is tacky.

(Soundbite of laughter)

HALL: He admired it. I wouldn't give somebody a gift that had been given to me that I was not fond of, you know, just to pass it on. But this was something that people actually admired.

KEYES: All right. Nancy, I know that you have some online shopping tips. Ways to get cool stuff for less money.

Ms. TREJOS: Right, and also ways to generate income. You know, maybe around this time of year you should try to freelance, get a second job or sell your clothing. I did that one year where I just went around my closet and I took out stuff that I didn't need and I sold it and it was a good way to...

KEYES: You mean like at a consignment shop.

Ms. TREJOS: Yeah, yeah, or a thrift store. Yeah.

KEYES: Is that tough to do? I mean, doesn't it have to be designer clothing? Are there particular tiers of clothing for that to work? I think we tried that once and they told us our stuff was too old.

(Soundbite of laughter)

Ms. TREJOS: Right. I mean, you know, it depends on every store. But, you know, you can find a few things to give away.

KEYES: And, Alvin, how do you stay sane and under budget during the holidays? I mean, do you have to get up and do some kind of chant every morning before you leave the house? How do you make that work?

HALL: I plan my day so that I go to the stores when there are the fewest number of people in the stores. So I don't have to deal with that craziness and the crowdedness in the street. And, also, I'm very, very disciplined. I don't like to go around stores and just look, look, look. I go get what I want, make sure it's a good price and then I leave. And then I may go and sit in a park and think, oh, I've done that. Let me brace myself for the next round.

(Soundbite of laughter)

HALL: I do think you can't be out there with everybody shopping at the same time because that will just drive you crazy. And always remember, there will be a bargain someplace, the next day or the day after.

KEYES: Nancy, really briefly, did you just turn off the radio at this time of year not to hear the ads?

(Soundbite of laughter)

Ms. TREJOS: I do. And like I said, I try - I plan ahead. I make my list of people I'm buying gifts for and when I go to the store, I take that list with me. So I've become much more disciplined than I used to be.

(Soundbite of laughter)

KEYES: And obviously we are not advocating that you turn off the radio. Hello, NPR.

(Soundbite of laughter)

KEYES: Nancy Trejos writes for The Washington Post. She is the author of the new book "Hot (Broke) Messes: How to Have Your Latte and Drink It Too." She joined us in our studios in Washington, D.C. And Alvin Hall is our regular contributor and maybe a re-gifter on matters of personal finance and the economy.

(Soundbite of laughter)

KEYES: He's the author of "Your Money or Your Life," and joined us from our studios in New York. Thank you so much for coming and happy Thanksgiving.

Ms. TREJOS: Thank you.

HALL: Happy Thanksgiving to you.

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