Jim Winsett

Q: I'm trying to be frugal, while still being able to enjoy the holidays. Does the BBB have any tips on how to not break the bank this holiday season?

A: With the joy of the holidays comes the stress of over spending. Every year, many consumers overspend during the holidays, starting off the New Year in debt. But not to worry. You can make this year debt-free by creating a holiday budget and sticking to it.

The National Retail Federation is finding that most consumers will be conservative on their holiday spending this year, forecasting an average spending of $738 for the total season, which is down from the previous year of $752.

Whether you plan to spend more or less than that average, the key is to set a budget and stick to it. And while it is not the most festive way to spend an evening, it is important to sit down and crunch the numbers, because building a budget and sticking to it over the holidays will keep away a painful financial holiday hangover.

BBB recommends the following four steps to help with holiday spending this year:

Step One: Consider your income.

The first step is to measure how much money is coming in. Add up your monthly salary along with your spouse's, dividends or interest payments and other sources of income.

Step Two: Add up regular monthly expenses. Adding up expenses is usually harder than determining your income because there are so many more factors to consider. Start with your rent or mortgage, utilities and credit card payments. Also factor in other expenses for gas and car maintenance, health care and groceries.

Step Three: Estimate extra holiday expenses. A lot of little purchases have a way of adding up over the holidays, and it is important to consider all of the expenses for the season including:

• Gifts. Make an itemized list of everyone you want to buy presents for and estimate how much you are willing to spend for each. This includes presents for family, friends and co-workers. Also consider the cost for holiday cards and postage.

• Entertaining. Entertaining is big over the holidays. Think about who you will be having over and also budget for any food or beverages you might need to bring to someone else's party. Also consider the costs for eating out and going to the movies--both popular expenses over the holidays.

• Decorations. Take stock of what you already own and then consider any additional spending you might need to make for a tree, lights, ornaments, wrapping paper, etc.

• Travel. If you are heading out of town for the holidays, consider the cost of travel including any car maintenance or pet boarding if applicable.

• Charitable donations. The holidays are a time of giving, so budget in how much you plan on donating to a worthy cause. You can learn more about being a savvy donor from the BBB Wise Giving Alliance at www.bbb.org/charity.

Step Four: Revisit, evaluate and revise your budget along the way.

Once you have added up your income and expenses, it is time to compare. If more is going out than coming in, it is time to go back over your budget and pare down expenses. Consider giving fewer gifts or less expensive ways of entertaining. Last year's decorations are also probably just fine.

Once you have balanced your budget, revisit it frequently over the holidays to make sure you are sticking to it. You might find that you overestimated in some categories and underestimated in others.

Whether you plan to shop either at the store or online, it is good practice to have a "game plan" or, even better, a list of what you want to buy, so as to avoid impulse buys on the side that can add up. Decide what items you will buy online and which items you will purchase at local retailers. Go to www.bbb.org to check out its BBB Business Reviews before you shop.

Many retailers are offering holiday deals, but it's always a good idea to comparison shop. Online prices may be better, but don't forget to factor in shipping costs. Also, keep layaway in mind as on option, as many stores are offering it. Be sure to read all the fine print, though, and ask questions to be comfortable knowing what contract you are getting into.

Make your holidays merry and bright with a plan, a budget and the resolve to stick to it. Come January, you can start the New Year with a clean slate instead of a stack of bills.

Jim Winsett is president of the Better Business Bureau in Chattanooga.