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Holiday cheer or stressful New Year?

BY DORRIS KRESSE

The joy of the holiday season can sometimes be overshadowed by the stress caused by out-of-control holiday spending. At U.S. Bank, we often speak with customers who have put themselves in a difficult financial position once New Year comes and the bills start to arrive.

This year may be particularly difficult as energy costs are digging into discretionary income. But as we all know, the spirit of the holidays can make us temporarily forget the financial discipline we were committed to in November.

Whle there isn't much that can be done once the spending has occurred, my advice to clients is to plan for holiday spending just as you would any other household expense and save accordingly. But while it may be too late to set aside a holiday fund this year, it's not too late to set parameters that will ensure that the holiday cheer doesn't turn into a financial hangover.

Set a budget-Hands down this is the best way to stay out of debt. Be realistic and conservative at the same time. Mark down everyone who will get a gift from you and set a dollar amount on that gift. If possible, build in some discretionary amount for last minute purchases. Then track your spending carefully.

Use online bill paying services to make sure you pay your holiday bills on time when they come due. At our bank, payments can often be made the same day they are being set up. Also, all transactions and bill payments are protected to cover any losses if something were to go wrong.

Buy gift cards-Although once viewed as impersonal, gift cards are quickly becoming the present of choice. According to an October 2005 survey by Stored Value Systems, seven in 10 American adults had either purchased or received a gift card this past year. During this holiday season, purchasers will buy between four and 14 cards, with $43 the average value of each card.

Many gift cards have flexible denominations, which allows you to better control spending. Some gift cards, including the U.S. Bank Visa Gift Card, provides zero liability for unauthorized purchases, offering a level of security not afforded by cash or checks, and even come with a personalized greeting card.

Use your credit card wisely-If you are someone who likes to shop with a credit card, try to use one that benefits your family by earning a cash rebate, airlinemiles or points toward something you have on your own gift list. Pay off the balance as soon as possible to avoid finance charges.

Use your debit card-The American Bankers Association says that debit card purchases are now tied with cash - about 33 percent - for the highest share of consumers' in-store purchases. People standing in line behind someone with a debit or credit card appreciate how quickly the transaction goes. Find a debit card that provides perks for usage such as discounts at certain retailers, redeemable points towards merchandise or cash back. Online tracking of expenditures with a debit card can be a real eye opener to how much you or your partner are spending.

Think long term-Once the holidays are over, start planning for next year. Post holiday sales are great for bargains. Set up an automatic transfer from your checking account to your savings account every month to accumulate a nice cushion.

. Dorris Kresse is branch manager of U.S. Bank in Sunnyside.

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