We all know how easy it is to overspend on expensive gifts for your kids, and all those lavish meals for your relatives, but financial advisor Dave Ramsey from Fox Business Network says he has a holiday spending plan that just about anyone can stick to.
Create your holiday budget on an envelope, and put cash inside.
Ramsey says this idea may sound simple, but it's very effective. Write down every gift you have to buy and how much you plan to spend on an envelope, and then put the total amount of cash in the envelope.
"Santa Claus said make a list, check it twice!" Ramsey said. "When the envelope is empty ... go home!"
If you don't have enough in your budget to buy expensive gifts for your children or relatives, you simply can't.
Only use cash to pay for holiday purchases.
Ramsey says that if you're reaching for a credit card because you can't really afford an item, you should start paying for all your gifts and holiday expenses in cash. If you don't do that, you'll still be paying for the holidays in the summer. The average consumer plans to pay off their holiday bills in three months, but Ramsey says the true time frame is more like six months.
Don't worry about keeping up with the Joneses, he said. "The Joneses are pretty broke."
A new survey by the National Foundation for Credit Counseling found that 68 percent of respondents plan to pay for their holiday gifts in cash. Ramsey says if those people stick to their intentions, they'll be off to a good start in the new year.