Ho, ho, hold the line on credit cards

You're walking through the mall and see a gift that would hit the spot for dear Aunt Dora.

The price, though, is equally dear and exceeds the budget for Dora.

No problem. You reach for your credit card.

Hold that thought.

Because while you don't want to come across as Scrooge at Christmas, you also don't want February credit-card bills to haunt you like some ghost of Christmas past. And there may be a better way.

Christmas offers many consumers a generous justification for an all-out shopping binge, one that takes many over the edge and deep into debt.

Financial experts advise consumers to make a shopping budget, develop a strategy for sticking to it, and, above all, resist the urge to substitute credit cards for money they don't have.

Over the Christmas shopping season - just six weeks - consumers will likely spend one-quarter of their annual shopping budget.

More of that spending than ever is expected to go on credit cards, according to a retail industry study, and much of it will stretch family budgets too thin.

Americans are expected to spend $174 billion this Christmas season, a 6 percent increase over last year. Yet only 59 percent say they plan to budget that spending - an average $1,342 each.

Holiday spending for Ken Shankweiler, for example, was a primary culprit in a $42,000 credit-card debt, he says.

Now Mr. Shankweiler and his wife, Irene, teach seminars to help others dig out of debt.

"People don't realize the debt they've gotten into until January," says Mrs. Shankweiler, who, with Ken, runs Debt Busters, a Massachusetts company that teaches people how to get out of debt.

"It hurts less when you use plastic, because you think of it as somebody else's money," she says.

But you're really spending your own future money - and lots of it.

Spend $2,000 on a credit card, make the minimum payment every month, and the debt may not be paid off until some 30 years and $10,000 later.

And that's just the beginning of the problem.

People don't realize the other half, Mr. Shankweiler says: You're not only paying interest on the card, but, if invested, that money could have become a substantial retirement nest egg.

Total consumer debt in the US amounts to $1.3 trillion, excluding mortgages. And another record 1.39 million people declared bankruptcy this year, according to Mastercard International.

Adding to that debt load may not be the best way to express the Christmas spirit.

The only way to give gifts without busting the budget is to save beforehand, says popular personal-finance columnist Jane Bryant Quinn.

Writing checks and using debit cards or cards that require full payment each month are OK.

But forget buying on credit.

"The idea that you can go shopping without money is a lovely American idea," says Ms. Quinn, "but it's nonsense."

If you don't have the savings already, Irene Shankweiler suggests saving in December to buy fewer, smaller gifts.

"Most families know what it's like" scraping to pay for Christmas gifts, she says. "It's nothing to be ashamed of."

She suggests making a list of everyone you need to buy gifts for, then writing how much you can afford to spend on each person next to their name. Then stick to the numbers, or at least the total, budgeted amount.

Giving presents to co-workers, too, has gotten out of hand, says Quinn. One year it's a little gift, next year it gets bigger, and then even bigger. Bosses should declare the office a no-gift zone, she says.

In the meantime, you don't have to join in.

"We should be saving our money for those closest to us in our families," she says.

All that sounds like common sense. But the problem is deeper, says Mr. Shankweiler.

Conventional wisdom addresses debt as a financial problem, he says. But it's really a behavioral problem. Plastic "gives you a feeling that's false, of having something you don't have," he says.

People use credit because "we're bombarded by credit cards, retailers, and financial companies" saying we need this, that, and the other, he says. But "their whole purpose is to get into our pockets.

"The whole problem isn't that we don't have enough, it's that people don't live within their means."

GIFTS THAT WORK

If you haven't saved yet for Christmas, all is not lost.

By cutting back on your spending in December, you can still likely save enough money to give meaningful gifts to some of your most-important people.

You can also give gifts of time, specialized services, or homemade goods to family and friends.

And if you don't ring up credit-card bills this year, you can start saving for bigger gifts next year.

In the meantime, cutting back the number of gifts you have to buy can make the ones you give more meaningful, says Irene Shankweiler, president of Debt Busters, in Acushnet, Mass.

Her family initiated a gift drawing for adults a few years ago, and everyone liked it. The traditional method of buying something for everyone "gets old," she says.

Such gift drawings don't work for kids, however. They don't understand.

Here are some ideas for low-cost Christmas gifts:

* Offer to fix dinner for someone (your Mom?) for two weeks.

"I for one would be delighted if someone offered to fix 10 dinners for me," says personal-finance columnist Jane Bryant Quinn.

* Use a special or professional skill to provide someone a service.

If you're an accountant, for instance, you could offer help with someone's taxes for the coming year. Or if you have computer skills, you can offer to teach them. And if you know how to use the Internet, passing that skill along could well be the best gift a friend or relative receives this Christmas.

"The key is service," says Ms. Quinn.

* You can make food gifts such as fudge, cookies, bread, even salad dressing. Buy tins or baskets at the "dollar store" to dress them up, Ms. Shankweiler suggests.

* Co-workers or others who are not close family may get by with a card, Quinn says.

YOU KNOW YOU'RE IN DEBT TROUBLE IF

You pay the minimum on credit-card bills.

You borrow for living expenses or other loans.

You miss important bills (rent or mortgage).

You've taken a debt-consolidation loan.

Your debts cause tension in your home life.

Your debts lower your self-esteem.

You make unrealistic promises to creditors.

Source: adapted from Debtors Anonymous

* Comment to evarts@csmonitor.com