Frugal Family Challenge: Can Zaceks resist holiday splurge?

— -- Widespread job uncertainty and plummeting 401(k) accounts are making a Hallmark-like happy holiday seem unlikely for many people.

Many families are reconsidering going overboard on gifts in the midst of what could be a painful recession.

This month's Frugal Family Challenge focuses on how to spend more wisely this holiday season.

We've set the Zacek family of North Carolina up with a financial coach who's giving them tips on how to resist the urge to splurge. ABC's Good Morning America Weekend will reveal whether they stayed on budget on Sunday, Dec. 14. We'll publish their post-shopping saga in USA TODAY on Monday, Dec. 15.

When USA TODAY and ABC's Good Morning America Weekend challenged Sue and Eldon Zacek Jr. of Concord, N.C., to rein in what they planned to spend for each of their two kids, we thought they'd put up more of a fight.

The couple's two children, Eldon III, 15, and Valerie, 12, both have birthdays within a month of Christmas, so "it's our time of major personal celebrating. I didn't want my kids to lose their birthdays and Christmas in the same year," says Sue Zacek.

Sue says they were hoping to spend $200 to $500 for each child's birthday and Christmas. But author, therapist and money coach Olivia Mellan suggested the couple cut that upper limit in half.

Then Eldon, to his wife's amazement, reduced that by half. Eldon said the family probably should cap spending on each family member for Christmas at $100, but agreed to a challenge of keeping Christmas for the whole family at under $500.

This season much tougher

Work and financial issues have become a major source of concern for the Zaceks.

Sue works as a business analyst for Wachovia Bank, which is in the middle of a merger with Wells Fargo. She's "cautiously optimistic," but knows she could be without work if the new company decides to cut jobs early next year. She went from being a contractor to a full-time employee at Wachovia right before the storm of bad news, so even though she makes less, she has more job security.

Eldon Jr. is a self-employed consultant to the stock-car racing league, NASCAR, where sponsorships are drying up. His contract is set to expire at the end of January, and he doesn't know whether it will be renewed. "In Charlotte, banking and racing are everything," Sue says. "And in this economy, both are on shaky ground right now."

The couple doesn't have any college savings other than about $10,000 the kids' grandparents have put in mutual funds for them. And Eldon III has his heart set on an Ivy League college in about two years. They consider their home, on 3.5 acres 20 miles outside of Charlotte, to be their "investment plan," though Sue is starting to save toward her retirement in a 401(k) at her company. They also have an RV that they hope to retire to in 10 or 20 years. (They're both 46.)

On top of that, the family includes three large dogs that are well-loved, but costly to feed and keep healthy. "We need to have six months' expenses in a savings account, but that isn't reality now, either," Sue says.

While Eldon worries about how the family would manage if he or Sue lost their jobs, Sue is confident they'd be OK with "some drastic changes."

That kind of point-counterpoint defines the Zaceks' money personalities. Eldon acknowledges being more of a spender, and Mellan describes Sue as "more of the hoarder or saver."

But neither has ever been good at budgeting. Sue likes to buy things that are a good value — like the $10 jeans she buys her family at a local store — or gold, which, unlike costume jewelry, holds its value. Eldon says he buys things when he sees them if they seem "right for the kids or right for my wife." Because he says his income "goes up and down, it depends how flush I am at the end of the month."

Telling the kids

The couple had a talk with their kids when Wachovia and other banks' financial problems hit the news this fall: "We told them that things are going to get worse before they get better, so we have to be very careful about what we buy," Sue says.

Eldon, Jr. reminded them last month, too: "You need to set your expectations a little bit lower. From what our past Christmas has been, this one is not going to be as strong."

Mellan asked the family to also have a discussion about what's most meaningful to each of them about the holidays and how they could preserve that — "assuming that not everyone says it's getting gifts," Mellan says.

That was a particularly important point for the Zaceks to hear. They had let their weekly game night slide a bit since their four schedules became difficult to manage.

While she was impressed that the family already spends considerable amounts of quality time together, Mellan encouraged them to focus on activities that didn't involve material things.

Mellan encouraged Eldon Jr. to learn "limit setting" with money. "I know, it's a muscle you didn't have before," she said. "But you won't feel deprived. You feel virtuous. It's like living in a different universe."

Good Morning America's technology contributor, Becky Worley, made limit setting a lot easier for the high-tech family. The kids' Christmas wish lists included video gaming accessories, digital watches, MP3 players, music players and some video camera needs.

Worley's suggestion: Instead of browsing the local electronics store, look for deals online.

She also urged the Zaceks to consider refurbished iPods, as that's the brand of MP3 player the kids want. Refurbished doesn't mean the merchandise was broken and rebuilt, Worley says. Typically, it was returned, then certified by the company to be sold again — at 35% to 40% discounts, she says.

Without giving away any holiday gift secrets, Worley talked the couple into coming up with their own music-based gift set — with all items purchased separately, then dressed up in a gift basket — which would be less than half the price of something similar that Valerie wanted. She also encouraged Eldon to use his "geek skills" to download software and other technology that would make a great gift for their daughter.

Sue says one of the benefits of this process was that it forced her family to carve out time to think about what's important and how much they enjoy spending time with each other.

"We just need to spend time more than we need to spend money," Sue says.