November 29, 2015


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Paying cash helps avoid spending money you don't have

Don't let that 'perfect gift' give you a hangover that lasts all year long, financial planners say.


Don't let that 'perfect gift' give you a hangover that lasts all year long, financial planners say. Purchase Photo Print

If you want to avoid a financial hangover that starts in January and lasts for months, a Winnipeg financial expert has one piece of advice for you -- pay cash when Christmas shopping.

Bruce Caplan, senior vice-president with BDO Canada, said nothing takes the glow off the holiday season like the thud of a credit card bill -- or more likely, several of them -- just a few weeks into the new year.

"If you don't have it (cash), you can't spend it," he said.

Some of the busiest shopping days of the year are right around the corner, but if you go into them without a plan -- and the gumption to stick to it amid the madness of a mall -- you can easily overextend yourself, Caplan said.

"Set a limit and track your spending. Say 'I'm only going to spend (a certain amount)' and once you get to that limit, your shopping is done," he said.

It doesn't help matters online commerce is growing by leaps and bounds and that you can't pay for those items with cash. According to recent figures from Statistics Canada, 56 per cent of Internet users ordered goods and services online last year.

"The ease of buying online makes it likely that the trend in over-spending will continue to rise, and while there are an infinite number of reasons why people get into debt, spending beyond their means is where it all begins," said David Wood, vice-chairman of the Canadian Association of Insolvency and Restructuring Professionals. "Surveys in recent years have shown most Canadians don't have a budget going into the holiday season, and this is one of the biggest causes of financial problems."

Wood, who is also president of Boale Wood Company Ltd., a Vancouver-based insolvency boutique firm, said he has seen an increase in the number of people coming to see him for post-holiday spending help in February.

"After the bills have come in and they've made it through a month of minimum payments, they suddenly realize the interest they're incurring and the debt they have is more than they can handle."

According to a recent Bank of Montreal report, holiday spending is expected to climb for a third straight year in 2013.

The BMO Holiday Spending Outlook found Canadians expect to spend an average of $1,810 this holiday season -- up from $1,610 (12 per cent) in 2012 and $1,397 (30 per cent) in 2011. The biggest uptick in spending is attributed to travel, which has increased by 22 per cent compared with a year ago, and nearly doubled since 2011.

If you'd like to avoid the annual panic to find the money to fund your Christmas plans, Caplan said you should start planning now for Dec. 25, 2014.

If your seasonal budget is $1,200, set aside $100 per month in a separate account so when the Christmas mayhem hits, you can have a stress-free holiday, he said.

Did you overspend this Christmas? By how much? Join the conversation in the comments below.

Republished from the Winnipeg Free Press print edition December 19, 2013 B5


Updated on Thursday, December 19, 2013 at 6:38 AM CST: Changes headline, adds photo, adds question for discussion

11:23 AM: fixes formatting

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