Money Coach: Get Your Fall Savings in Order

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The arrival of fall means the holidays are just around the corner. Financial expert Alvin Hall offers listeners advice on how to prepare for holiday spending without breaking the bank.

MICHEL MARTIN, host:

And now, it's time for visit with our Money Guru, Alvin Hall. Today: planning for the holidays. That's right, the holidays.

Now, we know that Ramadan's almost over. The Jewish High Holidays have just passed, and there's a heat wave, you say? It's not even Halloween yet. Well, we know all that, but the Christmas decorations are starting to show up, and the vacation travel people are starting to fill up your mailbox with bills they say you can't resist. So what better time to inoculate yourself against overspending than by having a little chat with our Money Man, Alvin Hall, who joins us from his home office in New York.

Hi, Alvin.

ALVIN HALL: Hello, Michel.

MARTIN: So I always wondered whether it's true, or is it one of those myths that people overspend in December and have the spending hangover in January?

HALL: It's 100 percent true. Christmas in particular is a time when people want to show how much they love somebody, and they want to be shown love. And if people are going to overspend, it's going to be at Christmas. That gift had better be the right gift.

MARTIN: Is this true for you? You're good about telling us your sort of personal little foibles, and you were telling us that August is a vulnerable time for you because it brings up, you know, feelings about not having the right school clothes and so forth. What about December? Is that a weak point for you, too?

HALL: No. Christmas is not a weak point for me, because I start shopping for Christmas on October 1st, and I try to be finished by November 1st. And my rule is to make a list of everyone I have to buy gifts for, decide how much money I'm going to spend on each person, and then try to find that gift for at least 25 percent off.

MARTIN: Okay.

(Soundbite of laughter)

MARTIN: Well, that is - you are hardcore, Alvin. You are hardcore.

HALL: Well, I don't think that's so hard. I think it's the reality of most people's budgets.

MARTIN: Well, talk about a budget. How do you set a budget for this?

HALL: Most of us have been to through this experience before, so you need to sit down now at the beginning of October and make a list of everyone you need to a buy gift for. Then look at the type of gift you want to buy for that person and then set a specific dollar amount for that gift. What undermines most people is that they set up this particular budget, but then they want to have the experience, the high, of finding that gift and say, oh, this is the perfect gift. And, oh yes, it's only 100 percent more than I had budgeted. Oh, but this is about love. Pull yourself back from that edge. Other part where people go overboard is the food.

MARTIN: You mean - that's what you mean, you don't mean holiday parties. You don't mean entertaining. You mean just those family meals.

HALL: Just those family meals, because that also becomes about love. You don't need to bake three sweet potato pies. You need to buy the biggest turkey in the supermarket, and then it sits around and then it goes in the refrigerator and three days later, you look at that Thanksgiving meal three days and you keep thinking, you know, I'm tired of this food. That dry turkey breast just doesn't taste good anymore. Toss it out. So set a budget, and remember that each of these days, whether it's Thanksgiving or Christmas, it's really one day, and it's about making that day special within means that you can afford.

MARTIN: You know, one of the things I wanted to ask you is that sometimes people, you know, families have different traditions, and some families use Christmas to buy things that they need anyway.

HALL: Yeah.

MARTIN: And some families use Christmas or the holidays to buy special things that they don't need anyway. I wonder which of those approaches leads to more of, you know, sort of breaking the bank. And the reason I asked is that I can envision a scenario where somebody said, oh well, I need to buy, you know, Sally Sue a laptop, anyway.

HALL: Yes.

MARTIN: Okay. So this is her Christmas present, so I'm going to really go all out.

HALL: Yes. I think it's almost when people would buy special gifts that they tend to go overboard. Needs a little bit different. For example, if my niece needed a computer, I would probably go around to all of my relatives and say, can you contribute to this one computer to reduce the cost on my part? So people need to think of these big gifts as being group gifts, not individual gifts.

MARTIN: So you're not of the buy-one-for-you-one-for-me school?

HALL: No. I'm a real big fan of set the budget in October. If you're lucky enough to buy it at 50 percent off, view it as divine intervention in your budget. Don't break the bank for Thanksgiving or Christmas.

MARTIN: Okay. What about the whole Christmas club idea? That used to be a custom, that people would have separate accounts for the holidays. That seems to have fallen by the wayside. What do you think about that?

HALL: I think you can set up your own Christmas club idea. I personally do this - I sound so old-fashioned sometimes, but I really do this all the time. Starting in about April, I start thinking about, well, here's how much money I'm going to spend for Christmas, and then I just start putting money away when I save money from not taking taxis or eating out. So I come to January with no credit card debt, no financial hangover, and I then commit myself to making the next year a better year, financially.

MARTIN: What are you getting me? Oh, just kidding. Just kidding.

HALL: No. I'm really good at choosing earrings, because when I was a kid, my grandmother would take me to Tallahassee with her when she would buy her Christmas outfit for church, and she would always let me stand in front of the counter and choose earrings. And to this day, I love to stand in front of a counter at Bergdorff or Saks and just look at earrings and choose them. But see, notice, I limit what I buy. That's one reason my budget works, because I don't go out and try to buy a specific gift for everybody that is something that they want. I buy what I think is appropriate for them that I can afford.

(Soundbite of laughter)

MARTIN: Okay.

HALL: They'll be beautiful earrings.

(Soundbite of laughter)

MARTIN: I guess, I'll be getting some earrings. Thank you, Alvin.

HALL: Your welcome, Michel.

MARTIN: Alvin Hall is our Money Coach. He joined us from his home office in New York.

Thanks, Alvin.

HALL: Thank you.

(Soundbite of laughter)

(Soundbite of music, "Jingle Bell Rock")

MARTIN: And that's our program for today. I'm Michel Martin, and this TELL ME MORE from NPR News. Let's talk more tomorrow.

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